JATA - Spring 1987

Volume 8, No. 2

Expert Systems in Taxation

Robert H. Michaelsen and William F. Messier, Jr.


This article analyzes the use of expert systems in taxation. First, a definition of expert systems is presented along with a review of current applications in taxation. Second, the potential usefulness of expert systems in four areas of taxation is evaluated: (1) planning, (2) legal research, (3) education, and (4) academic research. Criteria for identifying decision tasks appropriate for expert system development are introduced along with a discussion of potential applications of expert systems. Finally, a number of issues that may hinder the successful development of expert systems in taxation are presented.

An Approach to the Measurement of Tax Law Complexity

Susan B. Long and Judyth A. Swingen


The objective of this study is to develop a new approach to the measurement of tax law complexity. Complexity measures employed in prior research are reviewed and evaluated. A new measurement technique based upon the expert judgment of tax professionals is proposed. The feasibility of this method is tested using data from a survey of tax accountants, attorneys, return preparers, and educators. Results indicate that tax professionals are able to quantitatively rate the complexity of line items on a Form 1040; that there is high consensus in these ratings; and that ratings were not affected by differences in education, vocation, or experience level. The impact of six factors associated with complexity (ambiguity, calculations, changes, detail, forms, and record keeping) is also examined.

Interrelationships of Sections 731, 736, and 751: A Worksheet Approach

G. Fred Streuling, James H. Boyd, and Kenneth H. Heller


It is clear from the statutes that most distributions in liquidation of a partnership interest that involve some cash payments are subject to the provisions of three Code sections: Sections 731, 736, and 751. It is critical to understand in what sequence the provisions of all three sections are applicable. To facilitate the proper use of the intricate rules, the authors have developed a worksheet approach that is designed to apply the appropriate provisions in their correct sequence. Initially, this approach may require a considerable start-up effort. However, once the concepts have been mastered, the worksheet becomes an indispensable tool that converts a difficult and tedious task to a programmed decision process which simplifies the task, eliminates errors, and may be adaptable to the computer.

Tax Policy and Erroneous Information: An Analysis of the Interaction of Inflation, Indexation, and Income Averaging

William A. Duncan and Michael A. O'Dell


Congress substantially modified the income averaging provisions in 1984 to correct what it believed to be serious problems in the law. In the Committee Report on the Tax Reform Act of 1984, Congress contended that taxpayers were reaping unintended savings as a result of the interaction of the income averaging provisions and inflation, the effect of which would be magnified by indexing. This study evaluates the validity of this Report under a wide array of economic and tax assumptions. The results suggest that Congress's concerns were either irrelevant, mathematically incorrect, or founded on erroneous information. Such findings are offered in the hope that future tax legislation will be based on more reliable information.

Individual Tax Planning Software: A Critical Analysis

Steward S. Karlinsky and Blake Pintar


This study analyzes 14 individual tax planning software packages. The analysis should be useful to academicians in integrating computers and taxation in the classroom. Each package is measured for 143 tax and computer attributes which are classified in five broad categories: (1) documentation and training assistance¸(2) program mechanics, (3) input lines, (4) automatic features and computations performed, and (5) miscellaneous program features. These categories and attributes should help potential users determine the best program for their needs.

Recent Developments in Computer Usage in the Teaching of Tax Courses: Report of the 1984-85 American Taxation Association Computer Usage Committee

Debra M. White (Chair), Grant M. Clowery, Kevin M. Misiewicz, and Jerrold J. Stern


This report summarizes the experiences of respondents to an American Taxation Association membership survey on integrating computers into tax courses. Two principal advantages of introducing computers are identified: (1) to keep pace with developments in tax practice, and (2) to develop a tool for increasing student comprehension. Costs of introducing computers are identified and suggestions are provided for cost minimization.