Final answer:
The correct method for calculating the reversal of amounts when a phased-in change in tax rates occurs is by multiplying the tax rate of each future year by the amounts reversing in that year.
Step-by-step explanation:
When a phased-in change in tax rates is scheduled to occur, the method of calculation for reversing amounts in all future years is C) The tax rate of each future year is multiplied by the amounts reversing in each of those years. This approach takes into account the different tax rates that may be in effect in future years, ensuring that the calculation for tax obligations is accurate based on the tax schedule for the respective year. Since tax rates can change over time, and different brackets may be applied to income ranges each year, this technique aligns with the progressive nature of the tax system where marginal tax rates increase with higher income levels.
For instance, if someone is filing taxes as a single person the first portion of their income will be taxed at one rate, while income above that threshold may be taxed at a higher rate.