A GAAP Critic’s Guide to Corporate Income Taxes

42 Pages Posted: 13 Feb 2012 Last revised: 11 Jun 2013

See all articles by Mark J. Cowan

Mark J. Cowan

Boise State University -Department of Accountancy

Date Written: June 10, 2013

Abstract

The basic framework for accounting for income taxes under generally accepted accounting principles (GAAP) has been in place for nearly 20 years. Influential GAAP commentators have recently called for a thorough review of the GAAP tax accounting rules in light of normative accounting theory. Before such a review can take place, GAAP reformers must be armed with an overview of the legal, economic, and practical realities of the corporate income tax in today’s business environment. Nothing in the extant literature provides such an overview. This Article provides that overview, drawing on classic and contemporary authorities from a variety of perspectives. Among other topics, this Article reviews the legal definition of a tax, demonstrates how taxes are noncontractual in nature, discusses issues of economic incidence, reviews the reality of tax planning in today’s business environment, reviews the legal literature that describes the government as a “shareholder” in all firms, and shows the interconnected relationship among GAAP, corporate tax planning, and government enforcement efforts. This Article helps bridge the GAAP and tax law worlds by laying the ground work for GAAP critics to thoroughly examine and critique the current GAAP rules for income taxes.

Suggested Citation

Cowan, Mark J., A GAAP Critic’s Guide to Corporate Income Taxes (June 10, 2013). Tax Lawyer, Vol. 66, No. 1, 2012, Available at SSRN: https://ssrn.com/abstract=2003900 or http://dx.doi.org/10.2139/ssrn.2003900

Mark J. Cowan (Contact Author)

Boise State University -Department of Accountancy ( email )

1910 University Drive
Boise, ID 83716
United States

HOME PAGE: http://https://www.boisestate.edu/cobe-accountancy/department-of-accountancy/directory/mark_cowan/

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