William A. Raabe

Determining Innocence in Innocent-Spouse Court Cases using Logit/Probit Analysis

This paper examines the decision criteria used by federal courts to adjudicate equitable innocent-spouse relief, when such relief has previously been denied by the Internal Revenue Service (IRS). Empirical logit/probit regression is used, rather than traditional legal analysis. Specifically, we determine which of the equitable-relief criteria detailed in the innocent-spouse rules did affect judicial decisions during our sample period. We also determine the relative importance of the factors. Using these data, taxpayers and their advisors can better decide whether to pursue further litigation, and how best to tailor the pertinent arguments.

The Use of Generally Accepted Accounting Principles (GAAP) in Tax Litigation

Over the years, Generally Accepted Accounting Principles (GAAP) issues have been raised in tax litigation by both taxpayers and the IRS. By studying the tax cases in which GAAP has been used, the authors were able to identify which issues the parties raised, which issues the courts used in making decisions, and whether raising the GAAP issue helped the taxpayer or the IRS prevail. The information developed in this study is useful to tax advisors and the IRS, in deciding when and how to use GAAP as part of a tax litigation .strategy, and to the courts, in assessing the proper use of accounting standards in determining taxable income.