The Impact of the 1986 Tax Reform Act on Income Shifting From Corporate to Shareholder Tax Bases: Evidence From the Motor Carrier Industry

Using a sample of privately held C corporations and S corporations from the motor carrier industry during 1984-92, we assess the effect of the 1986 Tax Reform Act on the amount of corporate income shareholders of privately held C corporations shifted to their personal tax bases. We estimate that the C corporations shifted a mean of $130,587 taxable income each year to shareholders (representing 29percent of their mean accounting earnings…