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30. A financial analyst would classify deferred tax liabilities as equity (versus a liability) when: A. the deferred tax liabilities are expected to decline over time. B. the deferred tax liabilities are predominantly comprised of permanent differences. C. a change in tax law may result in the deferred taxes never being paid by the company.

Ans: C. If a change in tax law or a change in operations results in deferred taxes never being paid by the company, the deferred tax liabilities would be treated as equity by the financial analyst. A is incorrect. A financial analyst would treat deferred tax liabilities that are expected to decline over time as a legitimate liability. B is incorrect. Permanent differences are not included in deferred taxes.