If a valuation allowance is decreased (released) in the current year, the corporation's effective tax rate is lower than if the valuation allowance had not increased.

Question

Quizplus · Accepted Answer

This is because the release of a valuation allowance means that more deferred tax assets can be utilized to offset taxable income, resulting in a lower effective tax rate.

If a Valuation Allowance Is Decreased (Released) in the Current