The incremental income tax effect utilized to determine the tax effect of an extraordinary item is calculated by:
A) applying the estimated effective tax rate against the amount of the extraordinary item
B) the difference between the gross tax calculated on continuing operations and the gross tax on income from all sources, before tax credits are applied.
C) the difference between the estimated net tax calculated on the projected annual income from continuing operations and the estimated net tax calculated on projected annual income, including the non-ordinary items, after tax credits have been considered
D) none of the above.

Question

Quizplus · Accepted Answer

The incremental income tax effect is calculated by comparing the net tax on projected annual income from continuing operations with the net tax on projected annual income including extraordinary items, after considering tax credits.

The Incremental Income Tax Effect Utilized to Determine the Tax