Which,if any,of the provisions in the tax law below do not mitigate the effects of the annual accounting period concept?
A)Post year-end contribution to retirement plans for a self-employed person.
B)Carrybacks of net operating losses.
C)Installment sales treatment.
D)Carryovers of excess charitable contributions.
E)The arm's length concept.

Question

Quizplus · Accepted Answer

The arm's length concept pertains to transfer pricing, which relates to the pricing of goods or services transferred between related parties. It does not directly relate to mitigating the effects of the annual accounting period concept. The other provisions listed do mitigate the effects of the annual accounting period concept by allowing for adjustments or deferrals of income or deductions between different time periods. For example, post year-end contributions to retirement plans allow self-employed individuals to reduce their taxable income for the current year, while carrybacks of net operating losses allow businesses to recover taxes paid in prior years by applying current year losses against that income. Installment sales treatment and carryovers of excess charitable contributions also allow for deferral or adjustment of income recognition between different years.

Which,if Any,of the Provisions in the Tax Law Below Do