The Real Value of Tax Deferral

47 Pages Posted: 22 Jun 2008 Last revised: 20 Jan 2016

See all articles by Christopher H. Hanna

Christopher H. Hanna

Southern Methodist University - Dedman School of Law

Date Written: 2009


A leading law professor wrote, almost 25 years ago, that Deferral of gain is not as serious as outright exemption [exclusion], but it is the next best thing, as sophisticated taxpayers and their counsel are now well aware. If exclusion is not possible, then according to the professor, the next best result is to defer paying taxes on the item of income. From a tax law standpoint, very few academics would disagree with the statement that deferral is the next best thing to exclusion.

But how important is tax deferral in the real word, particularly with respect to the Fortune 500 companies and other publicly held corporations, which I focus on and refer to as Corporate America. In this article, I propose that, in Corporate America, tax exemption and tax deferral are worlds apart. Tax exemption is a huge benefit to Corporate America. Corporate America highly covets tax exemptions, which it generally refers to as permanent differences. Tax deferral, however, is a much smaller benefit to Corporate America, such that, in some cases, it becomes almost meaningless. Corporate America accepts tax deferral, which it refers to as temporary or timing differences, but, for the most part, devotes little time and resources in seeking out such items. In this article, I discuss why Corporate America values permanent differences and also why it places such little value on temporary differences.

Suggested Citation

Hanna, Christopher H., The Real Value of Tax Deferral (2009). Florida Law Review, Vol. 61, No. 2, 2009, SMU Dedman School of Law Legal Studies Research Paper No. 00-28, Available at SSRN:

Christopher H. Hanna (Contact Author)

Southern Methodist University - Dedman School of Law ( email )

P.O. Box 750116
Dallas, TX 75275
United States

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