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What Can We Infer About a Firm’s Taxable Income From Its Financial Statements?

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  • Hanlon, Michelle

Abstract

In this paper I review and describe the income tax disclosures currently required in firms’ financial statements. I discuss many of the problems with trying to estimate a firm’s actual tax liabilities and taxable income from the income tax expense and disclosures to the financial statements. In doing so, I reveal the conditions under which taxable income may most accurately be estimated from financial statements as well as those conditions which make this task difficult, if not impossible.

Suggested Citation

  • Hanlon, Michelle, 2003. "What Can We Infer About a Firm’s Taxable Income From Its Financial Statements?," National Tax Journal, National Tax Association;National Tax Journal, vol. 56(4), pages 831-863, December.
    • Handle: RePEc:ntj:journl:v:56:y:2003:i:4:p:831-63
    DOI: 10.17310/ntj.2003.4.07
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    1. John R. Graham & Mark H. Lang & Douglas A. Shackelford, 2002. "Employee Stock Options, Corporate Taxes and Debt Policy," NBER Working Papers 9289, National Bureau of Economic Research, Inc.
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    4. Graham, John R., 1996. "Debt and the marginal tax rate," Journal of Financial Economics, Elsevier, vol. 41(1), pages 41-73, May.
    5. Lenter, David & Slemrod, Joel & Shackelford, Douglas A., 2003. "Public Disclosure of Corporate Tax Return Information: Accounting, Economics, and Legal Perspectives," National Tax Journal, National Tax Association;National Tax Journal, vol. 56(4), pages 803-830, December.
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