Tax Analysts provides news, commentary and expert tax analysis on the deferral of taxes. Deferral of recognition or realization of gain is one of the primary tax strategies. When taxation of gain cannot be avoided, it is better done in the future. The time value of money is the name for the concept that money in the future is not worth as much as money now. Related concepts include interest, the return over time to money invested, and inflation, the loss of value in money over time, often due to increased resources chasing scarce goods and services. (See "Policy Behind Executive Compensation Proposal Questioned.")
Tax deferral strategies include delaying realization events and recognition events. Nonrecognition is important. Income is realized when an event has occurred such as the sale of an asset. The deferred gain realized would be the excess of the sale price over the taxpayer's basis in the asset (or loss if the asset is worth less than the taxpayer's basis in it). Income or loss is recognized based on certain triggers in the Tax Code. Generally, recognition occurs after (or at the same time as) realization. (See "International Taxation: Alibaba and the $40 Billion in Yahoo's Cave.")
Efforts to delay recognition of gain, often by selling loss assets and holding gain assets, can lead to the so-called lock-in effect where the natural rate of transacting is distorted. Taxpayers engaging in lock-in effect behaviors often seek to take advantage of the step up in basis that occurs when an asset passes through an estate. (See "Treasury Finalizes Regs Clarifying All-Cash D Rules.")
Tax Analysts provides guidance on deferral of taxes in the form of news stories, documents, and commentary. (See "IRS Considering Overhaul of Advance Payment Scheme.")
