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Effect of Tax Rate on DTL/DTA

Hello, can someone please explain the impact of a tax increase on deferred tax items? I have read that an increased tax rate increases the carrying amount in both cases; however, wouldn’t the taxed amount come out lower? Appreciate any help, I’ve always struggled to understand deferred tax items.

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DTAs and DTLs are calculated as the tax rate multiplied by the difference between the financial statement amount and the tax return amount.

Therefore, if the tax rate increases, the value of a DTA/DTL increases, and if the tax rate decreases, the value of a DTA/DTL decreases.

Simplify the complicated side; don't complify the simplicated side.

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Oh wow duh. I don’t know why I was thinking (1-T). Thank you so much!!

You’re quite welcome.

Simplify the complicated side; don't complify the simplicated side.

Financial Exam Help 123: The place to get help for the CFA® exams
http://financialexamhelp123.com/