Promulgting Deferred Tax Accounting Standards: An Exercise in Futility

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Abstract

Accounting for deferred income taxes, both in the United States of America (USA) and other nations, has been an omnipresent issue since at least the late 1930s. Although the theory of income tax allocation is somewhat simple, the application is complex and occupies a great deal of time for many accountants. To complicate the issue, income tax reporting standards have often been examined in a highly politicized environment—a statement that could be made for all three major USA standard setting bodies—the Committee on Accounting Procedure (CAP), the Accounting Principles Board (APB) and the Financial Accounting Standards Board (FASB). The Securities and Exchange Commission (SEC) and the U. S. Congress have also intruded into the standard-setting process over the years. The future does not look bright; although the International Accounting Standards Board (IASB) is addressing the issue, the possibilities for international convergence and/or adoption do not look promising. The purpose of this paper was initially to explore the historical and theoretical development of deferred tax accounting (interperiod tax allocation) and its evolution or lack thereof due to the unresolved conflicts and issues. The conclusion is that there has been more of a devolution than an evolution.

Authors

• Tonya K Flesher, University of Mississippi

• Dale L Flesher, University of Mississippi