The Impact of the 1986 Tax Reform Act on Income Shifting from Corporate to Shareholder Tax Bases: Evidence from the Motor Carrier Industry

Charles R. Enis and Bin Ke

Journal of Accounting Research, 2003, vol. 41, issue 1, 65-88

Abstract: Using a sample of privately held C corporations and S corporations from the motor carrier industry during 1984–92, we assess the effect of the 1986 Tax Reform Act on the amount of corporate income shareholders of privately held C corporations shifted to their personal tax bases. We estimate that the C corporations shifted a mean of $130,587 taxable income each year to shareholders (representing 29% of their mean accounting earnings before income shifting) after the 1986 tax law change. The C corporations used deductible managerial compensation and rent expense, but not interest expense, to shift income to shareholders.

Date: 2003
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Persistent link: https://EconPapers.repec.org/RePEc:bla:joares:v:41:y:2003:i:1:p:65-88

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Journal of Accounting Research is currently edited by Philip G. Berger, Luzi Hail, Christian Leuz, Haresh Sapra, Douglas J. Skinner, Rodrigo Verdi and Regina Wittenberg Moerman

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