The Effect of Gender, Political Affiliation, and Family Composition on Reasonable Compensation Decisions: An Empirical Assist

Abstract

Reasonable compensation is a highly scrutinized area of taxation by the Internal Revenue Service because of the tax impact on both corporations and employees. The guidance provided via statutory and administrative authority does not fully address this issue. Specifically, there is a lack of clarity and consistency in this arena of tax. Our study examines reasonable compensation in closely held corporations and the impact of gender, political affiliation, and family makeup on decisions made in the US Tax Court. The time frame of judicial decisions covers 1983 through 2014. We use regression models and chi-square tests to analyze the effect of gender, political affiliation, and family composition on US Tax Court decisions in reasonable compensation cases. We find that the judge’s gender and tenure/experience are significant. Our results also suggest a relationship between the duration of the case and the judge’s decision. Our significant variables include judge’s gender, number of tax years covered by the case, taxpayer’s gender, and tenure/experience of the judge.

Citation

Dowis, W.B. and Englebrecht, T.D. (2018), "The Effect of Gender, Political Affiliation, and Family Composition on Reasonable Compensation Decisions: An Empirical Assist", Advances in Taxation (Advances in Taxation, Vol. 25), Emerald Publishing Limited, Leeds, pp. 73-90. https://doi.org/10.1108/S1058-749720180000025004