Affiliation:
1. John L. Abernathy is an Assistant Professor at Oklahoma State University, Stephan A. Davenport is a Ph.D. Candidate at The University of Alabama, and Eric T. Rapley is a Ph.D. Candidate at Oklahoma State University.
Abstract
ABSTRACT:
In 2010, the Internal Revenue Service (IRS) announced the requirement to disclose uncertain tax positions (UTP) on a new schedule (Schedule UTP) to be filed with federal corporate income tax returns. Schedule UTP could increase a firm's tax burden by providing a roadmap for the IRS to identify firms' tax-planning strategies. We find that stock returns around the development of Schedule UTP are negative, consistent with investors' concern that Schedule UTP would impose costs on firms. However, we document a significant positive stock price reaction to the release of the final draft of Schedule UTP in which the IRS relaxed many of the controversial provisions of Schedule UTP. Additionally, we find this positive reaction is incrementally larger for more tax-aggressive firms. Finally, we find a significant decrease in reported unrecognized tax benefits (UTBs) and additions to UTBs after the adoption of Schedule UTP in 2010.
Publisher
American Accounting Association
Reference44 articles.
1. IRS' Schedule of Uncertain Tax Positions raises concerns for preserving privilege;Alston and Bird LLP,2010
2. Pre-empting disclosure? Firms' decisions prior to FIN 48;Blouin;The Accounting Review,2010
3. The evolving Schedule M-3: A new era of corporate show and tell?;Boynton;National Tax Journal,2004
4. Cazier , R .,
S . Rego ,
X . Tian , and R . Wilson .
2009 . Early Evidence on the Determinants of Unrecognized Tax Benefits . Working paper , The University of Iowa .
5. Internal control versus external manipulation: A model of corporate income tax evasion;Chen;RAND Journal of Economics,2005
Cited by
26 articles.
订阅此论文施引文献
订阅此论文施引文献，注册后可以免费订阅5篇论文的施引文献，订阅后可以查看论文全部施引文献