ANNUAL ACCOUNTING AND TRANSACTIONAL CONCEPTS

Annual Accounting and Transactional Concepts

Annual Accounting and Transactional Concepts

Arrow smith, 344 U.S. 6, is a United States Supreme Court case regarding taxation. The case involves taxpayers who liquidated a corporation in 1937. The taxpayers (properly) reported the income from the liquidation as long-capital gains, thus obtaining a preferential tax rate. Subsequent to the liquidation in 1944, the taxpayers were required to pay a judgment arising from the affairs of the liquidated corporation. The taxpayers classified this payment as an ordinary business loss, which would allow them to take a greater deduction for the loss than would be permitted for a capital loss.

The "Arrow smith Doctrine" is a principle of United States Federal Income tax law that holds that financial restorations associated with prior income items take the same tax "flavor" as the prior income items. The Commissioner of Internal Revenue characterized the payment of the judgment as part of the original liquidation transaction, and therefore the loss was a capital loss and not an ordinary business loss. The Tax Court disagreed with the Commissioner and found it to be an ordinary business loss. The Second Circuit Court of Appeals reversed the Tax Court and held it to be a capital loss. The U.S. Supreme Court agreed with the Second Circuit and held that it was a capital loss.

This case was decided prior to the enactment of Sec. 1341 of the Internal Revenue Code, however that statute would not have changed the outcome in this particular case.

This paper aims to understand how management accounting systems (MAS) 1 are implicated in processes of individual (UN) learning2 and organizational culture change, and how they may be used to identify 'trustworthy' solutions in the face of organizational crises. By extending the institutional framework of management accounting change developed by (Grey and Garsten 2001), we will explore the role of MAS as practices acting both as sources and objects of trust/distrust for change and discuss the way in which they may be relied upon by organisational actors to challenge existing knowledge, and open up possibilities for radical change.

The last 20 years have witnessed a massive transformation in business organizations, which have been forced by intense competition and the globalization of markets to re-define their strategies, structures and processes. Consequently, change has become a pervasive feature of organisational life. The role of accounting and control systems within processes of organisational learning and transformation has been widely debated in the literature. Various writers have illustrated the potential of accounting for visualizing, analyzing and measuring the current state of a business, for questioning operational and managerial strategies, and for justifying new courses of action. In particular, there is agreement that systems of measurement and accountability have the potential for making reality calculable (and thereby making individuals accountable—see Miller and O'Leary, 1994); for translating stock market driven pressures into quantifiable financial targets linked to production processes and business practices; for promoting employee identification with and commitment to specific values and operating philosophies; and for improving intra-organisational ...