Seeking Shelter: Empirically modeling tax shelters using financial statement information

Accounting Review

Volumn 85, Issue 5, 2010, Pages 1693-1720

  Lisowsky, Petro ^a  

^a UNIVERSITY OF ILLINOIS AT URBANA CHAMPAIGN   (United States)

Author keywords

Book tax differences; FIN 48; Roc curve; Tax cushion; Tax shelter

Indexed keywords

EID: 77958500335     PISSN: 00014826     EISSN: None     Source Type: Journal    
DOI: 10.2308/accr.2010.85.5.1693     Document Type: Review

References (47)

1. Boynton, C., P. Lisowsky, and W Trautman. 2008. E-file, enterprise structures, and tax compliance risk assessment. Tax Notes (September 15): 1069-1078.
2. Brown, J. 2009. The spread of aggressive corporate tax reporting: a detailed examination of the corporateowned life insurance shelter. Working paper, Arizona State University.
3. Chava, S., and R. Jarrow. 2004. Bankruptcy prediction with industry effects. Review of Finance 8 (4): 537-569.
4. Demers, E., and P. Joos. 2007. IPO failure risk. Journal of Accounting Research 45: 333-371.
5. Desai, M. 2003. The divergence between book income and tax income. In Tax Policy and the Economy (17), edited by James Poterba, 169-206. Cambridge, MA: MIT Press. Formerly "The corporate profit base, tax sheltering activity, and the changing nature of employee compensation," NBER Working Paper No. 8866.
6. D. Dharmapala. 2006. Corporate tax avoidance and high-powered incentives. Journal of Financial Economics 79 (1): 145-179.
7. C. F. Foley, and J. R. Hines, Jr. 2006. The demand for tax haven operations. Journal of Public Economics 90 (3): 513-531.
8. Dyreng, S., M. Hanlon, and E. Maydew. 2008. Long-run corporate tax avoidance. The Accounting Review 83 (1): 61-82.
9. Engel, E., M. Erickson, and E. Maydew. 1999. Debt-equity hybrid securities. Journal of Accounting Research 37: 249-274.
10. Financial Accounting Standards Board (FASB). 2006. Accounting for Uncertainty in Income Taxes-An Interpretation of FASB Statement No. 109. FASB Interpretation No. 48. Norwalk, CT: FASB.
11. Frank, M. M., L. Lynch, and S. Rego. 2009. Tax reporting aggressiveness and its relation to aggressive financial reporting. The Accounting Review 84 (2): 467-496.
12. Frischmann, P., T. Shevlin, and R. Wilson. 2008. Economic consequences of increasing the conformity in accounting for uncertain tax benefits. Journal of Accounting and Economics 46: 261-278.
13. Gleason, C, and L. Mills. 2002. Materiality and contingent tax liability reporting. The Accounting Review 77 (2): 317-342.
14. Graham, J., and A. Tucker. 2006. Tax shelters and corporate debt policy. Journal of Financial Economics 81 (3): 563-594.
15. Graetz, M. 1999. Quoted in Tax Report. Wall Street Journal (February 10): A1.
16. Hanlon, M. 2003. What can we infer about a firm's taxable income from its financial statements? National Tax Journal 56 (4): 831-863.
17. T. Shevlin. 2002. The accounting for the tax benefits of employee stock options and implications for research. Accounting Horizons 16(1): 1-16.
18. 2005. The persistence and pricing of earnings, accruals, and cash flows when firms have large book-tax differences. The Accounting Review 80: 137-166.
19. J. Slemrod. 2009. What does tax aggressiveness signal? Evidence from stock price reactions to news about tax shelter involvement. Journal of Public Economics 93: 126-141.
20. S. Heitzman. 2009. A review of tax research. Working paper, Massachusetts Institute of Technology and University of Rochester.
21. Hennig, C., D. Samelson, and B. Sonnier. 2008. The tax shelter dilemma: The impact of reportable transactions on the taxpayer and the tax return preparer. Working paper, Florida International University.
22. Hines, J. R., Jr., and E. Rice 1994. Fiscal paradise: Foreign tax havens and American business. The Quarterly Journal of Economics 109 (1): 149-182.
23. Hosmer, D., and S. Lemeshow. 2000. Applied Logistic Regression. 2nd edition. New York, NY: John Wiley & Sons, Inc.
24. Internal Revenue Service. 2005. KPMG to pay $456 million for criminal violations. Press Release IR2005-83 (August 29): http://www.irs.gov/ newsroom/article/0.,id=46999,00.html.
25. Jones, J. 1991. Earning management during import relief investigations. Journal of Accounting Research 40: 727-759.
26. Joos, P., and G. Plesko. 2005. Valuing loss firms. The Accounting Review 80 (3): 847-870.
27. Klein, A., and C. Marquardt. 2006. Fundamentals of accounting losses. The Accounting Review 81 (1): 179-206.
28. Kothari, S. P., A. Leone, and C. Wasley. 2005. Performance matched unexplained accrual measures. Journal of Accounting and Economics 39: 163-197.
29. Landsman, W., K. Peasnell, and C. Shakespeare. 2008. Are asset securitizations sales or loans? The Accounting Review 83 (5): 1251-1272.
30. Lisowsky, P. 2009. Inferring U.S. tax liability from financial statement information. The Journal of the American Taxation Association 31 (1): 29-63.
31. W. Trautman. 2007. Book-tax consolidation, rates of return, and capital structure. Tax Notes (December 10): 1043-1071.
32. L. Robinson, and A. Schmidt. 2010. An examination of FIN 48: Tax shelters, auditor independence, and corporate governance. Working paper, University of Illinois at Urbana-Champaign, Tuck School of Business at Dartmouth, and Columbia University.
33. McGiIl, G., and E. Outslay. 2002. Did Enron pay taxes? Using accounting information to decipher tax status. Tax Notes 96 (August 19): 1125-36.
34. 2004. Lost in translation: Detecting tax shelter activity in financial statements. National Tax Journal 57 (3): 739-756.
35. Mills, L. 1998. Book-tax differences and Internal Revenue Service adjustments. Journal of Accounting Research (Autumn): 343-356.
36. G. Plesko. 2003. Bridging the reporting gap: A proposal for more informative reconciling of book and taxable income. National Tax Journal 56 (4): 865-893.
37. K. Newberry. 2005. Firms' off-balance sheet and hybrid debt financing: Evidence from their book-tax reporting differences. Journal of Accounting Research 43 (2): 251-282.
38. L. Robinson, and R. Sansing. 2010. FIN 48 and tax compliance. The Accounting Review 85 (5): 1721-1742.
39. Organisation for Economic Co-Operation and Development. 2000. Toward Global Tax Co-Operation: Report to the 2000 Ministerial Council Meeting and Recommendations by the Committee on Fiscal Affairs; Progress in Identifying and Eliminating Harmful Tax Practices. Paris, France: OECD Publications.
40. Petersen, M. A. 2009. Estimating standard errors in finance panel data sets: Comparing approaches. Review of Financial Studies 22:435-480.
41. Plesko, G. 2000. Evidence and theory on corporate tax shelters. National Tax Association Proceedings from the 92nd Annual Conference on Taxation, 367-371, Atlanta, GA, October.
42. 2003. An evaluation of alternative measures of corporate tax rates. Journal of Accounting and Economics 35: 201-226.
43. U.S. Department of the Treasury. 1999. The Problem of Corporate Tax Shelters: Discussion, Analysis and Legislative Proposals. July. Washington, D.C.: Government Printing Office.
44. U.S. Senate Permanent Subcommittee on Investigations, Committee on Governmental Affairs. 2003. U.S. Tax Shelter Industry: The Role of Accountants, Lawyers, and Financial Professionals. Four KPMG Case Studies: FLIP, OPIS, BLIPS, and SC2. November. Washington, D.C.: Government Printing Office.
45. Wilson, G. P. 1995. Corporate tax effectiveness: Adding value through the tax function. Working paper, Harvard University.
46. Wilson, R. 2009. An examination of corporate tax shelter participants. The Accounting Review 84 (3): 969-999.
47. Wysocki, P. 2004. Discussion of: Ultimate ownership, income management, and legal and extra-legal institutions. Journal of Accounting Research 42: 463-474.