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INTEREST ACCRUAL AND THE TIME VALUE OF MONEY*
WALTER C. cliff

PHILIP J. LEVINE** *

TABLE OF CONTENTS

Introduction ................................................ I. The Accrual Method as a Distortion of Income ......... A. The Commissioners Broad Discretion Under Section 446(b) .................................... B. consumption of the Accrual Method for Reporting Interest Deductions on long-run Obligations Clearly Reflects Income ............................. 1. Technical advice memoranda requiring application of the cash regularity ................. 2. An argument that the cash method must be apply ........................................ 3. Use of the accrual method does not constitute a distortion of income ........................... II. The Method of Accruing Interest ...................... A. receipts Ruling 83-84 and the frugal Accrual of Interest ........................................... B. Revenue Ruling 83-84 and the Original expose Discount Rules .................................... C. Revenue Ruling 83-84 and Existing Law ........... D. Revenue Ruling 83-84 and Clear Reflection of Incom e ...........................................

108 111 III

one hundred fifteen 115 116 117 123 123 125 128 133

0 1985, Walter C. Cliff and PhilipJ. Levine. * Member, Cahill Gordon & Reindel, New York, New York.



Member, knot and New York Bars. B.S., 1955, University of Detroit; LL.B., 1955, University of Detroit; LL.M., 1956, New York University. ** Associate, Cahill Gordon & Reindel, New York, New York. Member, New York Bar. B.A., 1971, Clark University; J.D., 1974, put in University of New York at Buffalo; LL.M., 1980, New York University.

THE AMERICAN UNIVERSITY justness REVIEW

[Vol. 34:107 135 135 138 139

III.

The Tax Reform spell of 1984 .......................... A. Extension of Original Issue Discount Rules ........ B. An Alternative project ........................... Conclusion .................................................
INTRODUCTION

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