ABSTRACT
The AICPA committee on accounting procedure observed in 1944 that
basic difficulties arise in connection with income taxes where there are material and extraordinary differences between the taxable income on which they are computed and the income reported in the income statement under generally accepted accounting principles . . . As a result of such [differences] the income tax legally payable may not bear a normal relationship to the income shown in the income statement and the accounts therefore may not meet a normal standard of significance . . . Such a result . . . can readily be shown to be contrary to the principles of allocation which lie at the root of all accounting.
