Tax Law and Accounting
ACC/483 Income Tax Accounting
Joshua Montgomery
5/19/2008
Tax Law and Accounting Paper
There has been some wide controversy within the accounting field between tax law and accounting under the General Accepted Accounting principles, GAAP. The Internal Revenue Service tax code does not always agree with the regulations published by the GAAP. The IRS has published some of its own statutes that govern tax accounting and laws. When studying tax law and how it applies to the accounting field there are many areas that must be addressed. In this paper only three areas will be addressed. This paper will address the modern income tax statutes and their objectives, comparing and contrasting the GAAP and tax accounting, and finally how to differentiate between tax avoidance and tax evasion.
The objectives of modern income tax statutes are to simplify the confusing language used when the tax law was created in 1861, to help pay for the costs of the civil war, as part of the Revenue Act of 1861. Over the years this has led to the creation of the Internal Revenue Code of 1986. Over the current years the code has been amended multiple times to include amendment 26 U.S.C 1. This amendment specifically deals with imposing income tax on the taxable income of individuals, estates and trusts. The sixteenth amendment of the United States Constitution covers the governments ability to tax individuals income. The modern interpretation of this amendment comes from the court case, Commissioner versus Glenshaw Glass Co. Wikipedia.org explains this case in the following terms, “a taxpayer had receives an award of punitive damages from a competitor for antitrust violations, and sought to avoid pay ...