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Trends in the Sources of Permanent and Temporary Book-Tax Differences During the Schedule M-3 Era

Fabio B. Gaertner, Stacie K. Laplante, and Daniel P. Lynch

Abstract:

We use aggregate Schedule M-3 tax return data from Subchapter C corporations to provide descriptive evidence on book-tax differences from 2004 to 2013. Across the sample period, our primary findings are: (1) total book-tax differences increase, (2) a substantial amount of book-tax differences are explained by firms’ operations and financing, as well as economic incentives, (3) firms report a substantial but decreasing amount of book-tax differences in the “other” categories, (4) the frequency and magnitude of reportable transactions decreases significantly, and (5) foreign earnings and repatriations increase. However, the relative amount of foreign earnings repatriated decreases substantially after 2009.

Citation

Fabio B. Gaertner, Stacie K. Laplante, and Daniel P. Lynch (2016), Trends in the Sources of Permanent and Temporary Book-Tax Differences During the Schedule M-3 Era, National Tax Journal, 69:4, pp. 785-808

DOI: doi.org/10.17310/ntj.2016.4.03