The tax effects of permanent differences are always reported solely in a company's computation of its effective tax rate.
Some permanent differences (excess windfall benefits from NQO deductions) show up in shareholders' equity.

Question

Quizplus · Accepted Answer

Permanent differences do not affect the effective tax rate as they do not reverse over time. Some permanent differences, like excess tax benefits from stock options, can be reported in shareholders' equity.

The Tax Effects of Permanent Differences Are Always Reported Solely