9780415477543

The Timing of Income Recognition in Tax Law and the Time Value of Money

by ;
  • ISBN13:

    9780415477543

  • ISBN10:

    0415477549

  • Edition: 1st
  • Format: Hardcover
  • Copyright: 7/6/2009
  • Publisher: Routledge Caven
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Summary

Time itself creates advantages and disadvantages in the field of taxation. The timing of the recognition of income and expenses for tax purposes has two main implications: firstly, for the timing of the collection of tax, and secondly, for the question of quantification, i.e., how to ensure that the difference between the timing of the recognition of income or expenses, as opposed to the respective dates on which the amounts are actually received or paid, does not distort the determination of the amount of chargeable income. The time component is a weapon in the confrontation between the opposing motivations of the taxpayers and the tax authorities. In any given fiscal year, taxpayers seek to present a minimal picture of their chargeable income, by "deferring" the recognition of income or "advancing" the recognition of expenses. As opposed to this, the tax authorities adopt the opposite strategy: maximizing taxable "profit" in any given year. This book critically examines the various approaches that have been adopted in the tax systems in the UK, the US and Israel in relation to the timing of income recognition and expenses for tax purposes. It suggests an innovative tax model that identifies the advantages that arise to the taxpayer as a result of the differences between the timing of the recognition of income and expenses, and the timing of the receipt of the revenue or the payment of a liability, and taxes only that advantage.

Table of Contents

Introduction
Accounting Background
The Purpose of Financial Accounting and the Concept of prudence
The Distinction between Income, Revenue and Gain
Revenue Recognition
Expense Recognition
Advances and Deposits
Accounting Background - Summary and Comments
Tax Values
General Tax Values
The Time Value of Money Theory
Tax Values Relevant to the Question of Timing- Summary and Comments
Between GAAP and Fiscal Accounting
The Dualistic Doctrine and the Singular Doctrine
The Reporting Methods
Between GAAP and Fiscal accounting - U.K. Tax Law
Between GAAP and Fiscal accounting- U.S. Tax Law
Between GAAP and Fiscal accounting- Israeli Tax Law
Between GAAP and Fiscal Accounting- Summary and Comment
Timing of Recognition of Income from Deposits
The Loan Approach and the Income Approach
Timing of Recognition of Deposits as "Income" - U.K. Tax Law
Timing of Recognition of Deposits as "Income" - U.S. Tax Law
Timing of Recognition of Deposits as "Income" - Israeli Tax Law
Timing of Recognition of Income from Deposits - Summary and Comments
Timing of Recognition of Income from Advances
The Deferral Approach and the Advance Approach
Timing of Recognition of Income from Advances -U.K. Tax Law
Timing of Recognition of Income from Advances - U.S. Tax Law
Timing of Recognition of Income from Advances - Israeli Tax Law
Timing of Recognition of Income from Advances - Summary and Comments
Timing of the Deduction of Future Expenses
The Certainty Level Question and the Time Gap Question
Timing of Deduction of Future Expenses - U.K. Tax Law
Timing of Deduction of Future Expenses - U.S. Tax Law
Timing of Deduction of Future Expenses - Israeli Tax Law
Timing of Deduction of Future Expenses- Summary and Comments
Alternative Models
The Comparative Value Taxation Model (The C.V.T. Model)
The Saving of Financing Costs Taxation Model (The S.F.C. Model)
Selecting One of the Two Models
Impact on Tax Revenues
Table of Contents provided by Publisher. All Rights Reserved.

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