Postponing income

Postponing income

Purposely delaying receipt of income to a later year in order to reduce current tax liability.

Postponing Income

The act or practice of not receiving otherwise expected income in a given tax year in order to reduce one's tax liability. For example, a company may postpone income if it has had a net operating loss in the year to date and wishes to apply it to future tax liability. Realizing income in the current tax year may eliminate that possibility. See also: Future Income Tax.
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The first and foremost purpose is the ability to affect a company's taxable income in a given year by accelerating or postponing income or deductions.
Postponing income is desirable for those taxpayers who anticipate being in a lower tax bracket next year due to changed financial circumstances.
There is a deferral feature other than postponing income recognition until the later of the exercise or disposition of the option.
The only deferral-of-compensation feature is postponing income until the employee exercises the right.
Consider delaying exercise until next year if postponing income would be to your advantage.