There are some concepts in United States Generally Accepted Accounting Principles (GAAP) and the Internal Revenue Code (IRC) that I deem to be fundamental. They are fundamental in that they are generally, but not categorically, true. As such, they can be understood and mastered and serve reliably to give you a “gut” reaction as to what proper treatment is likely to be. They are the foundation for what I call my “smell test.” Of course, the gut reaction needs to be verified with authoritative literature. If the situation is unique and not addressed in authoritative sources, these fundamental concepts, assuming that they are properly understood, will put you on safe ground in terms of your position and how you approach the problem.
The materials in this document are not authoritative sources. Rather, these materials are observations of mine and my colleague on this project, Jim Combs. We are trying to give the reader an understanding of fundamentals that have guided us and served us well. GAAP items are referred to as “concepts” and IRC items are referred to as “doctrines.” We do not profess that this document includes all notions that others in the profession might consider to be of equal significance. Nor do we intend the presentations to be exhaustive discussions on the respective topics. This document can be expanded from time to time as deemed appropriate. However, the document should not become so voluminous that it is no longer useful. After all, how many truly “FUNDAMENTAL” concepts and doctrines can there be or can we deal with?