The question of whether an item of income or deduction must or can be recognized has long been a central focus of tax practitioners and tax administrators. When such an item is to be recognized has been accorded increasing interest and emphasis as well.

The enhanced scrutiny of timing issues has gone hand in hand with the developing appreciation of time value of money concepts. Based on these principles, sophisticated taxpayers, practitioners, and the IRS have come to understand that if tax can be postponed for a sufficient period of time, this deferral is the economic equivalent of never having to pay the tax at all. Likewise, the acceleration of a deduction enriches the taxpayer to a measurable, and very often substantial degree.

The topics of timing and accounting methods are inherent to the area of tax practice generally referred to as tax accounting. Tax accounting is concerned with the taxable periods used by taxpayers to measure and report income. Likewise, tax accounting focuses on the methods by which taxpayers calculate their reportable income.