In applying intraperiod income tax allocation to discontinued operations, extraordinary items, retrospective adjustments, and prior period adjustments, what tax rate should be used?

Question

Quizplus · Accepted Answer

The marginal (incremental) income tax rate should be used in applying intraperiod income tax allocation for discontinued operations, extraordinary items, retrospective adjustments, and prior period adjustments. The marginal tax rate is the rate applicable to the last unit of income and is the most appropriate when allocating income taxes related to individual items, as it reflects the tax rate that will apply to future income generated or losses incurred.

In Applying Intraperiod Income Tax Allocation to Discontinued Operations, Extraordinary