Exploring the income tax treatment of borrowing and liabilities, or why the accrual method should be eliminated.

From: Virginia Tax Review | Date: September 22, 2006| Author: Dodge, Joseph M. | Copyright information

I. INTRODUCTION

Income tax theory refers to those aspects of the income tax base that derive from the concept of a taxpayer's "net increase in wealth" over the taxable period (the taxable year). This Article examines the concept of "decrease in wealth" as it pertains to borrowing and to liability accruals under competing income tax concepts, including the ability-to-pay norm (1) and the Simons income tax (2) model, (3) and the ultimate manifestation of these concepts, na...

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