The court system is also involved in making tax law through decisions about specific fact situations. The main tax courts are the US Tax Court and the District Courts of the US. These decisions can (and do) overturn and change tax provisions based on other decisions, as well as the legislative history of the particular legislation.
The primary objective of the federal income tax law is to raise revenues for government operations. In recent years, the federal government has broadened its use of the tax laws to accomplish various economic and social policy objectives. Economic Objectives
The federal income tax law is used as a fiscal policy tool to stimulate private investment, reduce unemployment, and mitigate the effects of inflation on the economy. The federal income tax law also attempts to stimulate and encourage certain activities, specialized industries, and small businesses.
The tax law attempts to encourage or discourage certain socially desirable or undersirable activities. For example: Special tax-favored pension and profit-sharing plans have been created for employees and self-employed individuals to supplement the social security retirement system.
Compare and contrast GAAP and tax accounting. Explain why they are different.
GAAP accounting records all financial...