Tax Related Implications of Fair Value Accounting

Forthcoming in: The Routledge Companion to Fair Value in Accounting and Reporting, Edited by: Livne, Gilad and Garen Markarian. London: Routledge

23 Pages Posted: 18 Sep 2017

See all articles by Kay Blaufus

Kay Blaufus

Leibniz Universität Hannover

Martin Jacob

University of Navarra, IESE Business School

Date Written: September 14, 2017

Abstract

This paper discusses tax implications of fair value accounting. We first provide an overview over existing tax systems in Europe and the United States and the use of fair value elements for tax purposes. We also discuss potential costs and benefits of implementing fair value taxation. Benefits of using fair value accounting for tax purposes, for example, comprise fewer distortions of investment decisions. However, there are also potential downsides of fair value based taxation. For example, tax payments of firms could become more counter-cyclical and firms might have to pay taxes on unrealized gains. Taken together, our paper provides an overview of costs and benefits of fair value taxation as well as potential avenues for future research.

Suggested Citation

Blaufus, Kay and Jacob, Martin, Tax Related Implications of Fair Value Accounting (September 14, 2017). Forthcoming in: The Routledge Companion to Fair Value in Accounting and Reporting, Edited by: Livne, Gilad and Garen Markarian. London: Routledge , Available at SSRN: https://ssrn.com/abstract=3036857 or http://dx.doi.org/10.2139/ssrn.3036857

Kay Blaufus

Leibniz Universität Hannover ( email )

Institut für Betriebswirtschaftliche Steuerlehre
Koenigsworther Platz 1
Hannover, 30167
Germany

Martin Jacob (Contact Author)

University of Navarra, IESE Business School ( email )

Avenida Pearson 21
Barcelona, 08034
Spain

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