Reviews the book "Tax Reform and the Alliance for Progress," by Raynard M. Sommerfeld.

Abstract The article reviews the leading tax problems of U.S. investors in foreign companies in 1966. It also considers how accountants with their background in evaluating income measurement can aid in making tax barriers more suitably distributed for companies or individuals in the U.S. who are interested in direct investments abroad. The author concludes that it is true that equitable treatment concerning the imposition of taxes on a party operating in different jurisdictions is a responsibility primarily of the party himself. In addition, he observes that the problems are different from the ones usually found because of the international aspect, but many of them can be better resolved after a fresh look at the income theory angle.

Abstract This article discusses a new application of calculus and risk analysis of cost-volume-profit changes. Differential calculus has recently been applied to some cost-volume-profit situations as an extension of break-even analysis to find maximum profit levels when cost and/or revenue behavior is curvilinear. All companies consider the effect that changes in selling prices will have on the sales of their product. They are also laboring under a constant cost-push pressure to increase prices. Therefore, companies must forecast expected volume for the various changes in sales price. Then they must determine whether or not such changes will be profitable. The traditional method of approaching these problems is to select several discrete changes in sales prices, forecast new levels of sales at these points, and select the most profitable alternative. All managerial accounting texts explain this method but go no further. This article extends the usual approach by considering a continuum of price changes and incorporating risk in the analysis.

Abstract The federal income tax laws and regulations allow a certain latitude for businessmen to either capitalize or expense certain expenditures. One major area where such a latitude exists is repairs. When a company makes an expenditure for repairs which could be either capitalized or expensed without forseeable objection from the Internal Revenue Service, then a capitalize-expense decision must be made by management which will optimize profits. When an expenditure has been made which falls within a discretionary area for income taxes (e.g., it may be expensed or capitalized) a decision which maximizes the tax savings over time is desired. In general, the analysis will be the same as that used to determine the optimal depreciation policy for capitalized expenditures. In most practical situations salvage value on a particular asset is of no great concern. The revenue code allows the tax payer to reduce the amount of salvage by 10% of the cost of the depreciable property. Since most items of expenditure do not involve salvage values in excess of 10% of cost, salvage value presents no problem.