Winner Company has net temporary differences between tax and financial accounting of $80 million, resulting in a deferred tax liability of $28 million. What would be the impact on deferred taxes and net income if the tax rate increases?

a.

Increase in deferred tax liability and no effect on net income.

b.

Increase in deferred tax liability and decrease in net income.

c.

No effect on either deferred tax liability or net income.

d.

Decrease in deferred tax liability and no effect on net income.