income tax expense operating/non-operating

CFA Level I
#1

Is income tax expense an operating or non-operating item? GAPP versus IFRS

#2

As far as I can remember from one of the posts here (I think it was chung.da.neung) On the IS, it’s treated as a non-operating item (for non-financial firms) but on the CF statement, it can be classified as CFO (under GAAP) or CFO/CFF (under IFRS). Correct me if I’m wrong…

#3

I have a vague view on the classification of that. Can some one in forum clear that?

#4

cfatime is correct.

#5

I think there has been a bit of a wire-crossing here. Nitoha was asking about INCOME TAX expense, and I think that CFAtime was answering with regards to INTEREST expense. Interest expense is a non-operating item on the income statement (for non-financial firms) and CFO on the cash flow statement (for US GAAP, CFO/CFF IFRS). However, the question was related to income tax expense. I would think that this is a operating item on the income statement. On the cash flow statement, NI would already take this into effect so it would come into CFO.

#6

^ Wait a minute, how can it be an operating item if we calculate EBIT before tax expense…and EBIT is supposed to be “before nonoperating expenses”?

#7

Tax expense is NON OPERATING expense on the IS and an operating CF.