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Tax law

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Prepare a paper on tax law and accounting. In your paper, be sure to include the following:

a. Define the objectives of modern income tax statutes
b. Compare and contrast Generally Accepted Accounting Principles (GAAP) and tax accounting, and explain why they are different
c. Differentiate between tax avoidance and tax evasion

Use our assigned readings, Electronic Reading Reserve (ERR) articles, the Internet, and other resources to locate information to support the arguments in your paper. Be sure to properly cite your references. If you used an electronic source, include the URL. If you used a printed source, please attach a copy of the data to your paper.

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a. Define the objectives of modern income tax statutes
The objectives of modern income tax statues include collection of revenue. The government needs to make expenditure for legal authorities and for public welfare like clinics, hospitals, health-care and better education. Another important objective of modern income tax is redistribution of wealth among all sections of the society. For instance, the top 1% of the US population pays 25% of the taxes and the lowest 40% of the population does not pay federal income tax. The practice of redistribution is common in democracies. From another perspective the paying of income tax is a method of participating in the activities of the government.

b. Compare and contrast Generally Accepted Accounting Principles (GAAP) and tax accounting, and explain why they are different.

There are several differences between the GAAP and Tax accounting and they are different because of several reason. For instance, deferred tax liability leads to lower taxable income than pretax income. This difference occurs because Generally Accepted Accounting Principles matches fewer expenses than the Tax Code. The expenses matched in the Income Tax law are accelerated relative to Generally Accepted Accounting Principles. Similarly, Generally Accepted Accounting Principles recognizes more revenue than Income Tax law. For instance, the Generally Accepted Accounting Principles recognizes revenue before cash is actually collected. For instance, the un-remitted earnings of foreign subsidiaries. Again there are deferred tax assets when the taxable income is greater than pretax income. There are situations in which Generally Accepted Accounting Principles requires more expenses to be charged than the Income Tax law for instance Generally Accepted Accounting Principles requires warranty expenses before servicing warranty ...

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  • BSc , University of Calcutta
  • MBA, Eastern Institute for Integrated Learning in Management
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