Accounting for Income Taxes is the most comprehensive review of AFIT research. It isdesigned both to introduce new scholars to this field and to encourage active researchers toexpand frontiers related to accounting for income taxes.Accounting for Income Taxes includes both a primer about the rules governing AFIT (Sections3-4) and a review of the scholarly studies in the field (Sections 5-8). The primer uses accessibleexamples and clear language to express essential AFIT rules and institutional features.Section 3 reviews the basic rules and institutional details governing AFIT. Section 4 discussesways that researchers, policymakers, and other interested parties can use the tax informationin financial statements to better approximate information in the tax return. The second half ofthe monograph reviews the extant scholarly studies by splitting the research literature into fourtopics: earnings management, the association between book-tax differences and earningscharacteristics, the equity market pricing of information in the tax accounts, and book-taxconformity. Section 5 focuses on the use of the tax accounts to manage earnings through thevaluation allowance, the income tax contingency, and permanently reinvested foreign earnings.Section 6 discusses the association between book-tax differences and earningscharacteristics, namely earnings growth and earnings persistence. Section 7 explores how taxinformation is reflected in share prices. Section 8 reviews the increased alignment of accountingfor book purposes and tax purposes. The remainder of the monograph focuses on topics ofgeneral interest in the economics and econometrics literatures. Section 9 highlights some issuesof general importance including a theoretical framework to interpret and guide empirical AFITstudies, the disaggregated components of book-tax differences and research opportunities asthe U.S. moves toward International Financial Reporting Standards (IFRS). Section 10discusses econometric weaknesses that are common in AFIT research and proposes ways tomitigate their deleterious effects.