Strategic disclosure for political gain: The case of the corporate alternative minimum tax

Gil B. Manzon, Jr^1* and George Plesko²

¹Fulton Hall 536, Boston College.

² University of Connecticut, School of Business 2100 Hillside Road, Unit 1041A Storrs, CT 06269-1041.

*Corresponding author. E-mail: manzong@bc.edu. Tel: 617-552-4637. Fax: 617-552-6345

Accepted 11 September, 2009.

   Abstract

We examine the disclosure choices of firms subject to the Corporate Alternative Minimum Tax of the Tax Reform Act of 1986 (AMT). We find systematic differences in disclosure choices by firms subject to the AMT consistent with their attempting to influence perceptions of the effectiveness of the AMT. We believe these findings support the inference that firms will differentially respond to increased tax disclosures under Financial Interpretation 48 (FIN 48) that will require firms adopting uncertain tax positions to provide extensive disclosures for fiscal years beginning after 12/15/06.

Key words: Tax, political gain, corporate alternative.