Please answer A, B, C, and D of the problem below. Please show calculations and explain for non-tax professional to understand.

Income tax expense is summarized as follows: Fiscal Years 2016 2015 2014 $- 6 $ 1661 29 (10) 147) $(301 2 17 (11) 38 44 (Amounts in millions Current tax expense (benefit Federal State Puerto Rico Total current tax expense (benefit) Deferred tax expense benefit) Federal State Puerto Rico Total deferred tax expense Total income tax expense 281 (37) 804 96 14 914 $867 12 256 [] l 122 $166 $245 Effective Income Tax Rate Reconciliation The reconciliation between the U.S. federal statutory income tax rate and our effective income tax rate is as follows: Year Ended December 31, 2016 2015 2014 Federal statutory income tax rate 35.0% 35.0% 35.0% State taxes, net of federal benefit 4.0 (1.1) (8.81 Puerto Rico taxes, net of federal benefit 3.3 5.0 Change in valuation allowance (3.21 18.8 Permanent differences 0.6 Federal tax credits, net of reserves 10.5) 19.51 (10.61 Equity based compensation 12.2) Other, net 10.6) (1.01 10.6 Effective income tax rate 373% 25.1% 40.2% Fiscal Year (in millions 2016 2015 2014 Income before Taxes $2.327 10 1.6 $978 $413 Required a. What is T-Mobile's effective tax rate each year? What is the difference between T-Mobile's effective tax rate and the statutory rate? Detail the items making up the difference. b. Compare AT&T's effective tax rate for 2016, 2015, and 2014 from Example 17.24 in the text with the rate for T-Mobile. c. Compute T-Mobile's conservatism ratio for each year. Comment on any changes in the ratio over the years. Would you characterize T-Mobile as a conservative or aggressive tax reporter? d. Compare AT&T's conservatism ratio from Example 17.24 in the text with the ratio for T-Mobile. EXAMPLE 17.24 Financial Statement Analysis -Accounting for Income Taxes PROBLEM: To further understand income tax reporting at AT&T, use the following information to address the questions after the note. Note 11: Income Taxes A reconciliation of income tax expense (benefit) and the amount computed by applying the statutory federal income tax rate (35%) to income from continuing operations before income taxes is as follows: 2016 2015 2014 $7242 $3.624 416 (113) (in millions) Taxes computed at federal statutory rate $6,934 Increases (decreases) in income taxes resulting from: State and local income taxes - net of federal income tax benefit 483 Connecticut wireline sale 350 Loss of foreign tax credits in connection with Amrica Mvil sale 386 Mexico restructuring (471) Other-net (400) (720) 1628) Total $6,479 $7005 $3619 Effective Tax Rate 32.7% 33.9% 34.9% Other information follows: (in millions) 2016 2015 2014 Provision for Income Taxes Current $ 3,532 $ 2,888 $ 1,671 Deferred 2.947 4,117 1.948 Total provision $ 6,479 $ 7005 $ 3,619 Net Income before Taxes $19,812 $20,692 $10,355 Source: https://www.att.com/Investor/ATT_Annual/2016/downloads/att_ar2016_completeannualreport.pdf a. What is AT&T's effective tax rate each year? What is the difference between AT&T's effective tax rate and the statutory rate? Detail the items making up this difference. b. Compute AT&T's conservatism ratio for each year. Comment on any changes in the ratio over the years. Would you characterize AT&T as a conservative or aggressive tax reporter? Round to three decimal places. SOLUTION: a. AT&T's effective tax rate is 32.7%, 33.9%, and 34.9% in fiscal 2016, 2015, and 2014, respectively. In each year, the statutory tax rate is 35%. Therefore, AT&T's effective tax rate is lower than the statutory tax rate in all years. The effective tax rate is lower because of per- manent tax differences such as state and local income taxes and Mexico restructuring costs. b. To compute the conservatism ratio, we first have to estimate taxable income. Then, we use the taxable income in the computation of the conservatism ratio. SOLUTION: a. AT&T's effective tax rate is 32.7%, 33.9%, and 34.9% in fiscal 2016, 2015, and 2014, respectively. In each year, the statutory tax rate is 35%. Therefore, AT&T's effective tax rate is lower than the statutory tax rate in all years. The effective tax rate is lower because of per- manent tax differences such as state and local income taxes and Mexico restructuring costs. b. To compute the conservatism ratio, we first have to estimate taxable income. Then, we use the taxable income in the computation of the conservatism ratio. 2016 2015 2014 Taxable income $3,532 $2,888 $1,671 $10,801 Current Tax Expense $4,788 $8,519 32.7% 33.9% 34.9% Effective Income Tax Rate Conservatism Ratio $19,812 $20,692 $10,355 1.834 2.429 = 2.163 Reported Income before Taxes $10,801 $8,519 $4,788 Taxable income AT&T's conservatism ratio is highest in fiscal 2015 at 2.429. A conservatism ratio of 2.429 indicates that AT&T's reported income before taxes is 2.429 times greater than its taxable income. Therefore, AT&T is deferring taxes to be paid in future periods. AT&T's conservatism ratio decreased from 2.163 to 1.834 from 2014 to 2016, respectively, indicating that AT&T's tax reporting has become somewhat more conservative. Yet in 2016, the conservatism ratio is still greater than 1. Income tax expense is summarized as follows: Fiscal Years 2016 2015 2014 $- 6 $ 1661 29 (10) 147) $(301 2 17 (11) 38 44 (Amounts in millions Current tax expense (benefit Federal State Puerto Rico Total current tax expense (benefit) Deferred tax expense benefit) Federal State Puerto Rico Total deferred tax expense Total income tax expense 281 (37) 804 96 14 914 $867 12 256 [] l 122 $166 $245 Effective Income Tax Rate Reconciliation The reconciliation between the U.S. federal statutory income tax rate and our effective income tax rate is as follows: Year Ended December 31, 2016 2015 2014 Federal statutory income tax rate 35.0% 35.0% 35.0% State taxes, net of federal benefit 4.0 (1.1) (8.81 Puerto Rico taxes, net of federal benefit 3.3 5.0 Change in valuation allowance (3.21 18.8 Permanent differences 0.6 Federal tax credits, net of reserves 10.5) 19.51 (10.61 Equity based compensation 12.2) Other, net 10.6) (1.01 10.6 Effective income tax rate 373% 25.1% 40.2% Fiscal Year (in millions 2016 2015 2014 Income before Taxes $2.327 10 1.6 $978 $413 Required a. What is T-Mobile's effective tax rate each year? What is the difference between T-Mobile's effective tax rate and the statutory rate? Detail the items making up the difference. b. Compare AT&T's effective tax rate for 2016, 2015, and 2014 from Example 17.24 in the text with the rate for T-Mobile. c. Compute T-Mobile's conservatism ratio for each year. Comment on any changes in the ratio over the years. Would you characterize T-Mobile as a conservative or aggressive tax reporter? d. Compare AT&T's conservatism ratio from Example 17.24 in the text with the ratio for T-Mobile. EXAMPLE 17.24 Financial Statement Analysis -Accounting for Income Taxes PROBLEM: To further understand income tax reporting at AT&T, use the following information to address the questions after the note. Note 11: Income Taxes A reconciliation of income tax expense (benefit) and the amount computed by applying the statutory federal income tax rate (35%) to income from continuing operations before income taxes is as follows: 2016 2015 2014 $7242 $3.624 416 (113) (in millions) Taxes computed at federal statutory rate $6,934 Increases (decreases) in income taxes resulting from: State and local income taxes - net of federal income tax benefit 483 Connecticut wireline sale 350 Loss of foreign tax credits in connection with Amrica Mvil sale 386 Mexico restructuring (471) Other-net (400) (720) 1628) Total $6,479 $7005 $3619 Effective Tax Rate 32.7% 33.9% 34.9% Other information follows: (in millions) 2016 2015 2014 Provision for Income Taxes Current $ 3,532 $ 2,888 $ 1,671 Deferred 2.947 4,117 1.948 Total provision $ 6,479 $ 7005 $ 3,619 Net Income before Taxes $19,812 $20,692 $10,355 Source: https://www.att.com/Investor/ATT_Annual/2016/downloads/att_ar2016_completeannualreport.pdf a. What is AT&T's effective tax rate each year? What is the difference between AT&T's effective tax rate and the statutory rate? Detail the items making up this difference. b. Compute AT&T's conservatism ratio for each year. Comment on any changes in the ratio over the years. Would you characterize AT&T as a conservative or aggressive tax reporter? Round to three decimal places. SOLUTION: a. AT&T's effective tax rate is 32.7%, 33.9%, and 34.9% in fiscal 2016, 2015, and 2014, respectively. In each year, the statutory tax rate is 35%. Therefore, AT&T's effective tax rate is lower than the statutory tax rate in all years. The effective tax rate is lower because of per- manent tax differences such as state and local income taxes and Mexico restructuring costs. b. To compute the conservatism ratio, we first have to estimate taxable income. Then, we use the taxable income in the computation of the conservatism ratio. SOLUTION: a. AT&T's effective tax rate is 32.7%, 33.9%, and 34.9% in fiscal 2016, 2015, and 2014, respectively. In each year, the statutory tax rate is 35%. Therefore, AT&T's effective tax rate is lower than the statutory tax rate in all years. The effective tax rate is lower because of per- manent tax differences such as state and local income taxes and Mexico restructuring costs. b. To compute the conservatism ratio, we first have to estimate taxable income. Then, we use the taxable income in the computation of the conservatism ratio. 2016 2015 2014 Taxable income $3,532 $2,888 $1,671 $10,801 Current Tax Expense $4,788 $8,519 32.7% 33.9% 34.9% Effective Income Tax Rate Conservatism Ratio $19,812 $20,692 $10,355 1.834 2.429 = 2.163 Reported Income before Taxes $10,801 $8,519 $4,788 Taxable income AT&T's conservatism ratio is highest in fiscal 2015 at 2.429. A conservatism ratio of 2.429 indicates that AT&T's reported income before taxes is 2.429 times greater than its taxable income. Therefore, AT&T is deferring taxes to be paid in future periods. AT&T's conservatism ratio decreased from 2.163 to 1.834 from 2014 to 2016, respectively, indicating that AT&T's tax reporting has become somewhat more conservative. Yet in 2016, the conservatism ratio is still greater than 1