The Timing of Income Recognition in Tax Law: A comparative study

Time creates by itself advantages and disadvantages in the field of taxation. The perpetual confrontation between tax authorities and taxpayers creates opposing motivations: taxpayers strive to maximize tax advantages whereas tax authorities endeavour to cancel such advantages. The time component (or timing) has become a weapon in such a confrontation. It is thus natural that taxpayers will seek, in a given fiscal year, to present a minimalistic picture of the 'profit' that should be taxable in that year, and this may be done, inter alia, by 'deferring' the recognition of income or 'advancing' the recognition of deductions. It is natural, by the same token, that tax authorities adopt the opposite strategy: maximizing taxable 'profit' in any given year.Consequently, tax authorities will be inclined to advance the timing at which the income is recognized for calculating the 'taxable profit', or to defer the timing at which the deductions, reducing the 'profit' for tax purposes, may be...