Closing Deferred Revenue

Under current law, taxpayers can receive cash but not pay tax on it because the cash is considered deferred revenue. When a taxpayer writes an option or sells stock short, for example, the taxpayer receives cash, but the cash is not considered gain or loss until the option is exercised or until the short sale stock is replaced. In accounting, the cash received is not income, but deferred income. Under…
Andrews & Kurth Centennial Professor of Law, University of Texas at Austin - School of Law, USA
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