Tax Law

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Summarize the sources and objectives of modern income tax statutes. The primary source of US tax law is Congress. Power to initiate tax legislation is vested in the House of Representatives but all tax bills must pass both houses and be signed into law by the President. Many times the details of the legislation are not dictated by Congress, but left to the Treasury Department which adopts regulations (that have the force of law) to spell out the details as well as interpret the statutes and provide guidance on the law. In addition, the Internal Revenue Service (IRS) issues rulings that address the application of the law to specific fact situations. The court system is also involved in making tax law through decisions about specific…show more content…
If you are established in your business and do not need to issue financial statements, or your personal budget is adequate and realistic to your living needs, the simpler tax accounting methods may be better for you as your focus will remain on what is needed to successfully file taxes at the end of each year, and you do not need the masses of data associated with tracking every financial transaction that occurs during the year. Expert Insight Tax accounting, also known as OCBOA (Other Comprehensive Basis of Accounting), also includes a method of accounting known as cash basis. It is rare that any business can succeed basing its accounting on cash. The intricacies of financial transactions and the necessity of looking for non-cash based deductions come tax time make cash based tax accounting impractical. Note that all standards for accounting are set by the IASC (International Accounting Standards Commission). Differentiate between tax avoidance and tax evasion. Since the passage of the first income tax law, tax accountants, lawyers, and business persons have concerned themselves with choosing among the various forms a transaction may take. Tax planning is the process of arranging an individual’s transactions in such a manner as to maximize the individual’s after-tax income. This process is called tax avoidance, and it is a legal and legitimate pursuit. Some persons

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