The Impact of the 1986 Tax Reform Act on Income Shifting from Corporate to Shareholder Tax Bases: Evidence from the Motor Carrier Industry
Bin Ke
Nanyang Technological University
Charles R. Enis
Pennsylvania State University - Mary Jean and Frank P. Smeal College of Business Administration
July 2002
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 percent 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.
Number of Pages in PDF File: 35
JEL Classification: H25, M41
working papers series
Suggested Citation
Ke, Bin and Enis, Charles R., The Impact of the 1986 Tax Reform Act on Income Shifting from Corporate to Shareholder Tax Bases: Evidence from the Motor Carrier Industry (July 2002). Available at SSRN: http://ssrn.com/abstract=321741 or http://dx.doi.org/10.2139/ssrn.321741
