[phil_will1]

"Go look at any annual report and see if income taxes are listed under expenses."

Ok, I did just that. All three annual reports that I checked showed income taxes as a line item on the INCOME STATEMENT and were subtracted from revenues to arrive at Net Income.

Have you ever heard of EBIT (Earnings Before Income Taxes)? Any idea what the difference is between EBIT and Net Income?

Geez. I can't believe we are actually debating whether or not income taxes are an expense. This may be even dumber than the time we debated whether costs have any effect on prices. Actually, we have debated that obvious point several times on FR threads.

[Your Nightmare]

Ok, I did just that. All three annual reports that I checked showed income taxes as a line item on the INCOME STATEMENT and were subtracted from revenues to arrive at Net Income.

Were you expecting to see something else? If the company had a positive income, they pay taxes on it (actually, not necessarily). If they didn't, they don't. Income taxes, if paid, reduce net income.

Now go up a few lines above the Earnings Before Income Taxes. Do you see something like "cost of goods sold"?

Now go to the balance sheet and look under assets and then under liabilities. Do you see taxes under these?