A Major Conceptual Issue Regarding the Accounting for Income Taxes

question 40

Essay

A major conceptual issue regarding the accounting for income taxes is the recognition of income taxes as expenses.Some would argue that income taxes are not directly related to revenues or revenue-seeking functions and should not be considered as expenses.Some view income taxes as a distribution of income similar to dividends.This view would hold that income taxes,like dividends,are paid only if income is earned.Wages and supplies,on the other hand,are paid for whether the entity earns a profit or incurs a loss.
Identify arguments that can be made for recognizing income tax as an expense on the income statement.