The purpose of this article is to explore the applicability or non-applicability of tax allocation procedures to financial statements prepared on the basis of either current cost or price-level adjusted figures. Both current cost and price-level adjusted financial statements offer the balance sheet a position of more prominence than does the present-day historical cost approach. In the area of tax allocation, present practice and present theory are in basic agreement. Tax allocation can and should be rationally applied to historical cost statements, current cost statements or price-level adjusted statements. One weakness of the tax deferral approach is that it does not cover enough situations. For example, take the fairly common situation where a partnership incorporates, bringing in new investors at the same time. The books will often show assets at agreed-upon values at the date of incorporation, and these may differ sharply from the tax basis of the same assets. One type of objection to present practice points out that historic costs relate to the time periods in which assets were acquired, but are not meaningful expressions of value at later points in time. In contrast to historical cost, "the current cost of an asset is the sum of the current costs of the contained inputs."

This article examines the fundamental ethical rule in tax practice at the level of personal ethics in the U.S. in 1966. This rule states that the tax practitioner must allow the client to make the final decisions. The practitioner has no right to substitute his scale of values for that of the client. Beyond that, the practitioner must recognize a positive responsibility not to provide false or misleading information to the government. This responsibility is imposed on him by Circular 230 and by the Code of Professional Ethics of the American Institute of Certified Public Accountants.

Use of employee stock options by large American corporations is widespread. The Courts and the Congress have pondered long and produced complexity in their tax treatment. Financial analysts have been baffled by their possible effects. The accounting profession has once reversed itself as to the effect of issuance of stock options on income, and even yet is far from agreeing that present practice is satisfactory. At least five points of view may be distinguished relative to the accounting aspects of employee stock options: (a) Tax accounting; (b) "Generally accepted" accounting, as reflected by pronouncements of the American Institute of CPAs and the SEC; (c) "Cash value of services" concept; (d) "Accrual of value" concept; (e) Option value concept. This paper initially will look at the effect of the method involved on the reported net earnings of the employer, both in terms of amount and timing. It will then try to set forth a definition of accounting purpose, and test each of the five approaches against that definition. This paper will conclude with its own proposal, based on tax deductions foregone.

The article focuses on the concept of uni-fied accounting. The accounting problems of small and medium-size business cannot be solved by gimmicks. The techniques used in many large firms are still too costly, too experimental, too dependent upon a degree of routinization not yet achieved to be adaptable to the needs of small and medium-size business. It is in this area that the concepts of what has been termed Uni-fied or Simplified Unit Accounting have developed. Production costs were reduced in our factories, and distribution costs in wholesale and retail establishments, through utilizing certain techniques. In production, a basic technique has been to use a minimum number of uniform parts to form a maximum number of differentiated products. Both process and product have been organized to this end. In both areas, a certain degree of work organization and specialization of functions has helped cut cost. The concepts of Uni-fied accounting are merely a restatement of concepts utilized in manufacturing and distribution.

On writ of Certiorari to the District Court of Appeal, Fourth Appellate District of California. Mr. Chief Justice delivered the opinion of the Court on Whether a corporate entity can be ignored, even though the corporation is actually engaging in business and Whether a corporation, with no other stockholders than another corporation, the stock of which corporation in turn is owned by a corporation, and so on, add infinitum. Prior to December 31, 1951, respondent Edgar Lear was controlling stockholder of each and all of the respondent corporations. As of that date each of the corporations acquired stock in one or more other of the corporations, in such manner and to such effect that if the group of corporations were consolidated, no capital stock would be outstanding. The undisputed objective of the plan was to lessen the taxes of Edgar Lear-both the income tax and the estate tax-while keeping in the hands of Edgar Lear and his family the actual control of all of the respondent corporations.

Reviews the book, "Tax Factors in Business Decisions," by Dan Throop Smith.

Reviews the book "Auditing and Theory: A CPA Review," by Mary E. Murphy.