Which tax rate is used for measuring deferred tax assets and liabilities under US GAAP?

The choice regarding the use of the enacted tax rate expected to apply to taxable items in their relevant periods for measuring deferred tax assets and liabilities under US GAAP is correct because it aligns with the principles of accounting for income taxes as outlined in ASC 740.

Deferred tax assets and liabilities are recognized based on temporary differences between the carrying amounts in financial statements and the tax bases of assets and liabilities. The future realization of these deferred items depends on the tax rates that are enacted and expected to be in effect when these items reverse. Using the enacted tax rate reflects the probability of the tax consequences resulting from these timings, ensuring that the financial statements provide a faithful representation of the related future tax obligations or benefits.

Using anticipated future tax rates or proposed laws might introduce uncertainty and speculation into the measurement process, which is not aligned with the conservative nature of accounting principles aiming for reliability and consistency in financial reporting. Historical tax rates would not accurately reflect current or expected future conditions that impact tax liabilities and assets. Hence, utilizing the enacted tax rate for future periods appropriately encapsulates the expected tax landscape, leading to more accurate financial reporting under US GAAP.