Bridging the Reporting Gap: A Proposal for More Informative Reconciling of Book and Tax Income

55 Pages Posted: 21 Mar 2003

See all articles by George A. Plesko

George A. Plesko

University of Connecticut School of Business

Lillian F. Mills

University of Texas at Austin - McCombs School of Business

Date Written: March 17, 2003

Abstract

In this paper we review the history and purpose of the corporation income tax return's Schedule M-1 in light of recent attention to corporate reporting issues. Although the traditional role for the schedule has been to assist the audit process, the reconciliation of book to tax accounting numbers also provides information that is useful to tax analysts. We find the existing tax return Schedule M-1, largely unchanged since its introduction in 1963, provides insufficient detail for complex reconciliation issues. We propose a modified M-1 to achieve better reconciliation, and discuss the advantages, and disadvantages, of public disclosure of such data.

Keywords: Book-tax Difference, Schedule M-1, Income Taxes

JEL Classification: M41, H25

Suggested Citation

Plesko, George A. and Mills, Lillian F., Bridging the Reporting Gap: A Proposal for More Informative Reconciling of Book and Tax Income (March 17, 2003). MIT Sloan Working Paper No. 4289-03. Available at SSRN: https://ssrn.com/abstract=385280 or http://dx.doi.org/10.2139/ssrn.385280

George A. Plesko

University of Connecticut School of Business ( email )

School of Business
Storrs, CT 06269-2041
United States
860-486-6421 (Phone)

Lillian F. Mills (Contact Author)

University of Texas at Austin - McCombs School of Business ( email )

Austin, TX 78712
United States

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