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AN EMPIRICAL ANALYSIS OF THE TAX COURT'S DETERMINATION OF REASONABLE COMPENSATION
Author(s) -
Porcano Thomas M.
Publication year - 1982
Publication title -
decision sciences
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 1.238
H-Index - 108
eISSN - 1540-5915
pISSN - 0011-7315
DOI - 10.1111/j.1540-5915.1982.tb00149.x
Subject(s) - taxpayer , compensation (psychology) , appeal , tax court , regression analysis , business , law , law and economics , economics , actuarial science , political science , statistics , psychology , mathematics , social psychology
The determination of reasonable compensation is one of the most frequently contested issues between the taxpayer and the IRS. The major purpose of this study is to develop a multiple regression model to predict accurately the amount of compensation allowed by the Tax Court as a percent of the amount in dispute between the taxpayer and the IRS. In general, the taxpayer receives favorable treatment in Tax Court when contesting unreasonable compensation payments. The multiple regression model, developed using a stepwise procedure, is a good predictor of the compensation allowed by the court. The overall results have important implications for developing taxpayers' appeal strategies.