Bridging the Reporting Gap: A Proposal for More Informative Reconciling of Book and Tax Income
By Lillian F. Mills, G. Plesko. National tax journal, 2003
118 citations recorded by the source corpus.
In this paper, we review the history and purpose of the corporation income tax return's Schedule M-1 in light of recent attention to corporate reporting issues. Although the traditional role for the schedule has been to assist the audit process, the reconciliation of book to tax accounting numbers also provides information useful to tax analysts. We find the existing tax return Schedule M-1, largely unchanged since its introduction in 1963, provides insufficient detail for complex reconciliation issues. We propose revisions to the M-1 to achieve better reconciliation, and discuss the advantages and disadvantages of public disclosure of such data.
Subfields: Accounting, Economics and Econometrics
View Paper: https://www.semanticscholar.org/paper/7d53d184439ca941bf813c31f8dedfa39c959d08
How researchers see this paper
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In Accounting
- Edward L. Maydew
- Michelle Hanlon
- Merle M. Erickson
- Terry Shevlin
- Jennifer Blouin
- Thomas C. Omer
- David F. Larcker
- Gordon Richardson
In Economics and Econometrics
- Edward L. Maydew
- Michelle Hanlon
- Merle M. Erickson
- Gordon Richardson
- Roman Lanis
- Terry Shevlin
- Scott D. Dyreng
- Ryan J. Wilson
Citations in the corpus
- Taxable income as a performance measure: The effects of tax planning and earnings quality (2009, unknown): “” Likewise, Seida (2003) in his Congressional testimony regarding Enron’s tax disclosures and rather sizable differences in Enron’s book and taxable incomes poses the question of whether taxable income may be a useful alternative measure of income.”
- How Much Will Firms Pay for Earnings that Do Not Exist? Evidence of Taxes Paid on Allegedly Fraudulent Earnings (2004, background): “See Mills and Plesko (2003), who call for public disclosure of M-1 information, for additional information on the data currently contained in the M-1 as it relates to publicly filed financial statements.”
- Will a departure from tax-based accounting encourage tax noncompliance? Archival evidence from a transition economy (2010, unknown): “Acquiring taxable income from the tax returns minimizes measurement errors arising from the estimate of taxable income from tax expense and thus increases the power of our statistical tests (Hanlon, 2003; Mills and Plesko, 2003).”
- Using tax return data to simulate corporate marginal tax rates (2008, unknown): “22 Like Mills and Newberry (2005), we do not use leverage ratios from the tax return Schedule L balance sheet because Schedule L is supposed to be a book balance sheet.”
- What Can We Infer about a Firm's Taxable Income from Its Financial Statements? (2003, background): “See Manzon and Plesko (2002), Omer et al.”