Using confidential corporate income tax return data, this paper investigates the association between book-tax non-conformity (measured as book-tax differences) and tax-loss carryforwards (TLCFs). I find that TLCFs are positively associated with temporary and permanent book-tax differences. Only firms with positive pre-tax book income and negative taxable income (double-picture firms) drive the positive association between TLCFs and temporary book-tax differences. Conversely, the positive association of TLCFs and permanent book-tax differences is present for double-picture firms and the remaining firms. The results suggest that double-picture firms, which feature high TLCFs compared to their size and to the remaining firms, use temporary book-tax differences to report a lower taxable income than pre-tax book income. Thus, this paper contributes to the understanding of the drivers of rising TLCFs. This is important, as offsetting TLCFs against future profits jeopardizes a country's tax revenue. (author's abstract) / Series: WU International Taxation Research Paper Series
Identifer | oai:union.ndltd.org:VIENNA/oai:epub.wu-wien.ac.at:5083 |
Date | January 2016 |
Creators | Kohlhase, Saskia |
Publisher | WU Vienna University of Economics and Business, Universität Wien |
Source Sets | Wirtschaftsuniversität Wien |
Language | English |
Detected Language | English |
Type | Paper, NonPeerReviewed |
Format | application/pdf |
Relation | http://ssrn.com/abstract=2794992, http://epub.wu.ac.at/5083/ |
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