The Deduction of Interest Payments in an Ideal Tax on Realized Business Profits

Abstract: The realization rule, which allows taxpayers to defer tax on certain accrued gains and prevents taxpayers from deducting certain unrealized losses, had a deduction component. That component requires thatthe deferred income be quarantined and that any deductions relating to that deferred income be capitalized or otherwise deferred until the related income becomes taxable. For the most part, the need for capitalization in a realization system is well recognized by…