Taxable Income Management by Nonprofit Organizations

43 Pages Posted: 26 Dec 2001

See all articles by Robert J. Yetman

Robert J. Yetman

University of California, Davis - Graduate School of Management

Thomas C. Omer

University of Nebraska at Lincoln - School of Accountancy

Date Written: December 15, 2001

Abstract

We develop an analytical model of nonprofit tax reporting behavior and then examine the organization-specific characteristics that are associated with two measures of aggressive tax reporting. Our first measure is based on a distributional analysis which finds that an abnormally large number of nonprofit organizations manage their taxable income to near zero. Our second measure uses expense allocations from prior research. We find that aggressive tax reporting behavior is increasing in CPA prepared tax returns and tax rates and deceasing in IRS audit risk and accumulated net operating losses. The study represents the first analysis of the characteristics associated with taxable income management in the nonprofit setting.

Keywords: Tax compliance; Nonprofit organizations

JEL Classification: M41, M48, H24

Suggested Citation

Yetman, Robert and Omer, Thomas C., Taxable Income Management by Nonprofit Organizations (December 15, 2001). Available at SSRN: https://ssrn.com/abstract=294748 or http://dx.doi.org/10.2139/ssrn.294748

Robert Yetman (Contact Author)

University of California, Davis - Graduate School of Management ( email )

One Shields Avenue
Davis, CA 95616
United States

Thomas C. Omer

University of Nebraska at Lincoln - School of Accountancy ( email )

307 College of Business Administration
Lincoln, NE 68588-0488
United States