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The Relation Between Book and Taxable Income Since the Introduction of the Schedule M-3

Danielle H. Green and George A. Plesko

Abstract:

We review the trends in book-tax differences in the United States since 2004 under an evolving regulatory environment that has required businesses to provide greater disclosure of their tax positions to the Internal Revenue Service and to the public. We focus on the period since the release of the Schedule M-3 to examine book-tax differences over time and across reporting regimes. We find that while the magnitude of book-tax differences has continued to increase since the release of the Schedule M-3 and other disclosure changes, their relative magnitude has remained largely unchanged. We also find that traditional economic and accounting variables appear to explain less of the variation in book-tax differences over time.

Citation

Danielle H. Green and George A. Plesko (2016), The Relation Between Book and Taxable Income Since the Introduction of the Schedule M-3, National Tax Journal, 69:4, pp. 763-784

DOI: doi.org/10.17310/ntj.2016.4.02