Abstract The article presents the author's reply to comments on his paper "Misleading Tax Figures--A Problem for Accountants." According to the author, ideally, a single, theoretically defensible allocation formula would be prescribed for financial reporting. This method might be incorporated into the tax law. This does not suggest that allocation methods used for tax purposes should conform to GAAP. It was commented that where a consolidated tax liability is allocated for tax purposes in one way, but actual payment reflects a different allocation, the one which is used for payment purposes determine basis. This determination is unclear to the author. Presumably, the commentator is referring to payments among affiliates pursuant to the agent corporation paying the consolidated tax. The commentator seems to be saying that the allocation is ignored when it differs from the payment where both the allocation and payment arise from the group's consolidated tax liability. The commentator correctly observes that where a subsidiary is to be sold, the parent will generally try to minimize the taxable gain on the sale by maximizing its basis in the subsidiary.

Abstract Some corporate groups that file consolidated returns use different methods to allocate the consolidated tax liability for tax return and financial reporting purposes. Such dual allocations can cause the tax liability reported in an affiliate's financial statements to differ from the liability it reports to the Internal Revenue Service. This is not a "timing" or "permanent" difference as the terms normally are used. Differences arising from dual allocations are the focus of this paper. The paper examines the allocation of consolidated tax liabilities. An illustration is used to demonstrate the allocation methods specified for tax purposes, and the fact that the results of these methods generally do not conform to sound accounting practice is noted. An allocation method consistent with sound accounting practice then is proposed. Finally, the practice of using different allocation methods for tax and financial reporting purposes is examined, and the need for action by the accounting profession in this area is pointed out.

Abstract ABSTRACT: Over the past few years, several articles appearing in The Accounting Review have dealt with ranking journals based on "perceived quality" and accounting departments based on publications in "leading" journals. This paper identifies some questionable assumptions underlying earlier studies and provides journal quality evaluations which may be used in discriminating among accounting departments.