The typical tax course today utilizes a reference book as a text, focuses attention on the mechanics of the personal income tax, is taken almost exclusively by accounting majors, and accomplishes little that is educationally worthwhile except as the instructor injects background and philosophy from his own store of experiences. The author of the article like many others writers, has been experimenting with different ways of approaching the first tax course. His objectives agree with those of the American Accounting Association 1961 Committee on Income Tax Instruction. The problem of reaching agreement as to what are the underlying principles of income tax law is probably not much easier than that of defining accounting principles. Each general statement has a number of exceptions. Too often, there is a temptation to focus on the exceptions and ignore the rules. Author's broad objective in teaching is to communicate meaning. Author's basic orientation is directed towards business and investment decisions which also covers income, estate and gift taxes.

Accounting deals with the transactions and events involving a specific economic entity. This economic entity is of concern, in different ways, to its management, its stockholders, its long and short-term creditors, its employees, and various regulatory and taxing bodies. All except the regulatory and taxing bodies are more concerned with the future of the entity than with its past. The past is important as it affects specific obligations, but is primarily important as it foreshadows the future. An economic entity is basically an economic relationship among persons. Accounting, in turn, "is the art of recording, classifying and summarizing in a significant manner and in terms of money, transactions and events which are, in part at least, of a financial character, and interpreting the results thereof. "Accounting must obviously be done from the viewpoint of the economic entity involved in the transactions. It must deal with the transactions, or with the events involving the economic entity.

Tax allocation procedures used today produce inconsistent treatment on the balance sheet. When the asset's accounting basis is greater than the tax basis as the result of differences in timing, a credit must be carried on the balance-sheet. This credit has variously taken the form of a liability, a reduction in a fixed asset , a reduction in a deferred charge, or even an allocation of retained earnings. As previously mentioned, the major difference has been that due to depreciation. Here, the general practice has been to show the resulting credit as a non-current liability. To many accountants, this treatment is a distortion of the facts. At the moment of liability recognition for accounting purposes, no liability seems to them to exist. The liability may never come into existence, or its amount may be greater or less than the amount originally booked. An acceptable, but not widely followed, alternative has been to credit the accumulated depreciation rather than the liability account in these circumstances.