Yet More on Tax Allocation.

Abstract Robert Jaedicke and Carl Nelson in their article "The Allocation of Income Taxes--A Defense," published in the April 1960 issue of the journal "The Accounting Review" propose a slightly different point from which to view the argument for the inter-period allocation of the tax differential arising from the application of accelerated depreciation for tax purposes only. Subsequently Arnold Johnson in his article "More on Income-Tax-Allocation Accounting," published in the January 1961 issue of the journal summarized his position against period allocation of the tax differential, concluding that the statement of income for a given corporation for a given year should contain a deduction only for the income taxes payable to the U.S. Treasury for that year. Johnson's article, though following in time, made no overt reference to the earlier Jaedicke-Nelson article and is taken here as an independent element of the continuing debate on tax allocation. The intention of the present article is rebuttal on the Jaedicke-Nelson arguments. While along the way it hopes to provide evidence supporting Johnson's position that "allocation lacks the proof of either a legal liability or of a current asset value," the present effort centers itself in the following funds framework; the one in which Jaedicke and Nelson place their arguments.