7
Section 3
Description of the Sample
and Limitations of the Data
his section describes the 2001 Corporate
sample design, sample selection, data capture,
data cleaning, and data completion. The
techniques used to produce estimates and an
assessment of the data limitations, including
sampling and non-sampling errors, are also
discussed.
Background
From Tax Year 1916 through Tax Year 1950, data
were extracted for the Statistics of Income (SOI)
program from each corporate return filed. Stratified
probability sampling was introduced for Tax Year
1951. Since that time, the sample size has
generally decreased while the population has
increased. For example, for Tax Year 1951 the
sample comprised 41.5 percent of the entire
population, or 285,000 of the 687,000 total returns
filed. In comparison, for 2001, the sample proportion
was about 2.6 percent of the total population of over
5.5 million.
For 1951, stratification was by size of total assets
and industry. From 1952 through 1967, the
stratification was by a measure of size only. The
size was measured by volume of business (1953-
1958) or total assets (1952 and 1959-1967). Since
1968, returns have been stratified by both total
assets and, for Form 1120, 1120-A and 1120S
returns, a measure of income [1].
Target Population
The target population consists of all returns of
active corporations organized for profit that are
required to file one of the 1120 forms that are part of
the SOI study.
Survey Population
The survey population includes the returns that
filed one of the 1120 forms selected for the SOI
study and posted to the IRS Business Master File
(BMF). Amended returns and returns for which the
tax liabilities changed because of a tax audit are
excluded. Figure C gives the actual number of
corporate returns by form type that were subject to
sampling during Tax Years 1998 through 2001.
These population counts differ from all the estimated
population counts in this publication because they
include out-of-scope returns.
Bertrand ?berall, Richard Collins, and Kim Henry were
responsible for the sample design and estimation of the SOI 2001
Corporation Program under the direction of Yahia Ahmed, Chief,
Mathematical Statistics Section, Statistical Computing Branch.
Figure C.--Population Counts by Corporate Form
Type, Tax Years 1998-2001
Tax Year
Form Type
1998
1999
2000
2001
1120
2,190,409 2,165,338 2,146,170
2,142,542
1120-A
259,696
244,339
235,459
231,622
1120S
2,716,507 2,866,963 3,008,022 3,147,642
1120-L
1,572
1,522
1,465
1,479
1120-PC
3,352
3,437
3,593
3,930
1120-RIC
10,044
10,449
11,157
11,479
1120-REIT
969
1,079
1,114
1,057
1120-F
22,157
22,270
22,385
23,912
Total
5,204,706
5,315,397 5,429,365 5,563,663
Sample Design
The current sample design is a stratified
probability sample, with stratification by form type,
and either size of total assets alone, or both size of
total assets and a measure of income. Forms 1120
and 1120-A are stratified by size of total assets and
size of "proceeds." Size of "proceeds", which is
used as the measure of income, is defined to be the
larger of the absolute value of net income (or deficit)
or the absolute value of "cash flow," which is the
sum of net income, several depreciation amounts,
and depletion. Forms 1120-F, 1120-L, 1120-PC,
1120-RIC, and 1120-REIT are each stratified by size
of total assets only. Form 1120S is stratified by size
of total assets and size of ordinary income.
The design process began with projected
population totals that were derived from those used
to estimate IRS administrative workloads and
adjusted based on previous years' population
distributions. Using projected population totals by
sample strata, an optimal allocation, based on
stratum standard errors and cost estimates, was
carried out to assign a sample size to each stratum
such that the overall targeted sample size was
approximately 137,000. A Bernoulli sample was
selected independently from each stratum with
sampling rates ranging from 0.25 percent to 100
percent. Figure D on the following page shows the
stratum boundaries, the sampling rates, and the
frame population and sample counts from the BMF
for each form type. This table also shows the
population and sample counts after adjustments for
missing returns, outliers, and weight trimming. The
total realized sample for Tax Year 2001, including
inactive corporations and non-eligible returns, is
147,093 returns.
T
2001 Corporation Returns – Description of the Sample and Limitations of the Data
8
Figure D.--Corporation Returns: Number Filed, Number in Sample, and Sampling Rates, by Selection Class
Description of sample selection classes
Number of returns
BMF counts
After adjustments**
Sample
class
number
Size of total assets
Size of proceeds*
Sampling
rates (%)
Population
Sample
Population
Sample
All Returns, Total ......................................................................
5,563,663
147,093
5,563,781
146,479
Form 1120 w/ Form 5735 attached, Total ....................................
358
358
358
352?
1
Under $100,000,000....................................................................
100.00
286
286
286
282
2
$100,000,000 - $250,000,000........................................................
100.00
36
36
36
35
3
$250,000,000 or more..................................................................
100.00
36
36
36
35
Form 1120 (no Form 5735 attached), 1120-A, Total *** .................
2,364,422
73,789
2,364,531
73,347
4
Under $50,000...........................Under $25,000............................
0.40
884,902
3,580
884,902
3,568
5
$50,000 - $100,000 .................... $25,000 - $50,000 .......................
0.40
311,960
1,221
311,960
1,221
6
$100,000 - $250,000...................$50,000 - $100,000......................
0.50
408,684
1,992
408,684
1,984
7
$250,000 - $500,000...................$100,000 - $250,000....................
1.00
278,273
2,712
278,273
2,707
8
$500,000 - $1,000,000................$250,000 - $500,000....................
1.60
193,431
3,086
193,431
3,079
9
$1,000,000 - $2,500,000 ............. $500,000 - $1,000,000 .................
4.00
147,742
5,772
147,742
5,763
10
$2,500,000 - $5,000,000 ............. $1,000,000 - $1,500,000...............
5.60
57,731
3,208
57,731
3,198
11
$5,000,000 - $10,000,000............$1,500,000 - $2,500,000...............
10.00
32,727
3,246
32,725
3,237
12
$10,000,000 - $25,000,000..........$2,500,000 - $5,000,000...............
100.00
23,238
23,238
23,250
23,163
13
$25,000,000 - $50,000,000..........$5,000,000 - $10,000,000.............
100.00
11,259
11,259
11,258
10,914
14
$50,000,000 - $100,000,000 ........ $10,000,000 - $15,000,000 ...........
100.00
6,891
6,891
6,891
6,856
15
$100,000,000 - $250,000,000.......$15,000,000 or more....................
100.00
5,024
5,024
5,024
4,997
16
$250,000,000 - $500,000,000........................................................
100.00
1,253
1,253
1,247
1,247
17
$500,000,000 or more..................................................................
100.00
1,307
1,307
1,413
1,413
Form 1120S, Total ***................................................................
3,146,661
45,651
3,146,663
45,578
18
Under $50,000...........................Under $25,000............................
0.25
1,226,355
3,034
1,226,354
3,027
19
$50,000 - $100,000 .................... $25,000 - $50,000 .......................
0.25
506,944
1,243
506,944
1,242
20
$100,000 - $250,000...................$50,000 - $100,000......................
0.25
567,751
1,435
567,751
1,433
21
$250,000 - $500,000...................$100,000 - $250,000....................
0.40
373,615
1,544
373,615
1,541
22
$500,000 - $1,000,000................$250,000 - $500,000....................
0.76
206,053
1,556
206,052
1,553
23
$1,000,000 - $2,500,000 ............. $500,000 - $1,000,000 .................
2.10
146,080
3,022
146,078
3,019
24
$2,500,000 - $5,000,000 ............. $1,000,000 - $1,500,000...............
3.30
57,293
1,908
57,292
1,905
25
$5,000,000 - $10,000,000............$1,500,000 - $2,500,000...............
6.40
32,774
2,113
32,772
2,109
26
$10,000,000 - $25,000,000..........$2,500,000 - $5,000,000...............
100.00
19,224
19,224
19,227
19,189
27
$25,000,000 - $50,000,000..........$5,000,000 - $10,000,000.............
100.00
6,175
6,175
6,172
6,160
28
$50,000,000 - $100,000,000 ........ $10,000,000 - $15,000,000 ...........
100.00
2,375
2,375
2,374
2,373
29
$100,000,000 - $250,000,000.......$15,000,000 or more....................
100.00
1,302
1,302
1,295
1,290
30
$250,000,000 or more..................................................................
100.00
720
720
737
737
Form 1120-L, Total ....................................................................
1,239
673
1,247
676
31
Under $10,000,000......................................................................
43.00
971
405
955
385
32
$10,000,000 - $50,000,000...........................................................
100.00
146
146
151
150
33
$50,000,000 - $250,000,000 .........................................................
100.00
61
61
63
63
34
$250,000,000 or more..................................................................
100.00
61
61
78
78
Form 1120-F, Total ....................................................................
23,850
3,823
23,858
3,818
35
Under $10,000,000......................................................................
13.00
23,034
3,007
23,031
2,993
36
$10,000,000 - $50,000,000...........................................................
100.00
444
444
446
445
37
$50,000,000 - $250,000,000 .........................................................
100.00
191
191
191
190
38
$250,000,000 or more..................................................................
100.00
181
181
190
190
Form 1120-PC, Total..................................................................
3,651
1,068
3,652
1,061
39
Under $2,500,000 .......................................................................
10.00
2,211
199
2,206
191
40
$2,500,000 - $10,000,000.............................................................
25.00
769
198
769
197
41
$10,000,000 - $50,000,000...........................................................
100.00
536
536
541
538
42
$50,00,000 - $250,000,000...........................................................
100.00
127
127
126
125
43
$250,000,000 or more..................................................................
100.00
8
8
10
10
Form 1120-REIT, Total ...............................................................
829
700
831
695
44
Under $10,000,000......................................................................
25.00
178
49
181
47
45
$10,000,000 - $50,000,000...........................................................
100.00
188
188
188
187
46
$50,000,000 - $250,000,000 .........................................................
100.00
248
248
248
247
47
$250,000,000 or more..................................................................
100.00
215
215
214
214
Form 1120-RIC, Total ................................................................
10,989
9,367
10,992
9,359
48
Under $10,000,000......................................................................
15.00
1,887
265
1,875
251
49
$10,000,000 - $50,000,000...........................................................
100.00
2,409
2,409
2,416
2,413
50
$50,000,000 - $100,000,000 .........................................................
100.00
1,459
1,459
1,459
1,458
51
$100,000,000 - $250,000,000........................................................
100.00
2,009
2,009
2,008
2,003
52
$250,000,000 - $500,000,000........................................................
100.00
1,342
1,342
1,343
1,343
53
$500,000,000 or more..................................................................
100.00
1,883
1,883
1,891
1,891
54
Special Studies …………………………………………………………...
100.00
11,664
11,664
11,649
11,593?
* Proceeds is defined as the larger of absolute value of net income (deficit) or absolute value of cash flow (net income + depreciation + depletion).
** Includes adjustments for missing returns, outliers, and weight trimming.
*** Returns were classified according to either size of total assets or size of proceeds, whichever corresponded to the higher sample class.
Example: A Form 1120 return with total assets of $750,000 and proceeds of $75,000 is in sample class 8 (based on total assets), rather
than in sample class 6 (based on proceeds).
?
The adjusted sample count is lower than the adjusted population count due to returns unavailable for processing.
2001 Corporation Returns – Description of the Sample and Limitations of the Data
9
Sample Selection
Corporation income tax returns are filed at the
Cincinnati, Ogden, and Philadelphia IRS Submission
Processing Centers. All corporate returns are
processed initially to determine tax liability. All tax
data are transmitted and updated on a weekly basis
to the IRS Business Master File (BMF) system
located in Martinsburg, West Virginia. These returns
are said to “post” to the BMF. This BMF database
serves as the SOI sampling frame. The SOI sample
is also selected on a weekly basis.
Sample selections for Tax Year 2001 occurred
over the period of July 2001 through June 2003. A
24-month sampling period is needed for two
reasons. First, approximately 16.9 percent of all
corporations had noncalendar year accounting
periods. In order to take these filings into
consideration, the 2001 statistics represent all
corporations filing returns with accounting periods
ending during the period from July 2001 to June
2002. Also, many corporations, including some of
the largest, request six-month filing extensions. The
combination of noncalendar year filing and filing
extensions means that the last Tax Year 2001
returns that the IRS received (those with accounting
periods ending in June 2002, which must therefore
be filed by October 2002) could be timely filed as
late as March 2003, if the six-month extension of the
October 2002 due date is taken into account.
Normal administrative processing time lags required
that the sampling process remain open for the 2001
study until June 30, 2003. However, a few very
large returns for Tax Year 2001 were added to the
sample as late as November 2003.
Each tax return posted to the BMF and belonging
to the survey population (as defined above) is
assigned to a stratum and then subjected to
sampling. Each filing corporation has a unique
Employer Identification Number (EIN). An integer
function of the EIN, called the Transformed
Taxpayer Identification Number (TTIN), is computed.
The number formed by the last four digits of the
TTIN is a pseudo-random number. A return for
which this pseudo-random number is less than the
sampling rate multiplied by 10,000 is selected in the
sample.
The algorithm for generating the TTIN does not
change from year to year. Consequently, any
corporation selected into the sample in a given year
will be selected again the next year, providing that
the corporation files a return using the same EIN in
the two years and that it falls into a stratum with the
same or higher sampling rate. If the corporation falls
into a stratum with a lower rate, the probability of
selection will be the ratio of the second year
sampling rate to the first year sampling rate. If the
corporation files with a new EIN, the probability of
being selected will be independent of the prior year
selection [2].
Data Capture
Data processing for SOI begins with information
already extracted for administrative purposes; over
100 items are available from the BMF system, and
are checked and corrected as necessary. Some
1,300 additional data items are extracted from the
tax returns during SOI processing. The SOI data
capture process can take as little time as fifteen
minutes for a small, single entity corporation filing on
Form 1120-A, or up to a week for a large
consolidated corporation filing several hundred
attachments and schedules with the return. The
process is further complicated by several factors:
? The 1,300 separate data items that may be
extracted from any given tax return often require
totals to be constructed from various other items
on other parts of the return.
? Each 1120 form type has a different layout with
different types of schedules and attachments,
making data extraction less than uniform for the
various form types.
? There is no legal requirement that a corporation
meet its tax return filing requirements by filling in,
line by line, the entire U.S. tax return form.
Therefore, many corporate taxpayers report
many of their financial details in schedules of
their own design.
? There is no single accepted method of corporate
accounting used throughout the country, but
rather several accepted accounting "guidelines,"
many of which are unique to geographic
locations. SOI staff attempt to standardize these
differences during data abstraction and editing.
? Different companies may report the same data
item, such as other current liabilities, on different
lines of the tax form. Again, SOI staff attempt to
standardize these differences.
In order to help overcome these complexities and
differences due to taxpayer reporting, SOI staff
prepare detailed instructions for the SOI editing unit
at the IRS Submission Processing Centers each tax
year. For Tax Year 2001, these instructions
consisted of more than 900 pages covering standard
and straightforward procedures and instructions for
exceptions that might be encountered.
2001 Corporation Returns – Description of the Sample and Limitations of the Data
10
Data Cleaning
Statistical processing of the corporate returns is
performed in an online computer environment and
the data from returns are entered directly into the
SOI corporation database. In this context, the term
"editing" refers to the combined interactive
processes of data extraction, consistency testing,
and error resolution. There are over 900 of these
tests, which look for such inconsistencies as:
? Impossible conditions, such as incorrect tax data
for a particular form type;
? Internal inconsistencies, such as items not adding
to totals;
? Questionable values, such as a bank with an
unusually large amount reported for cost of goods
sold and/or operations; and
? Improper sample class codes, such as when a
return has $100 million in total assets, but was
selected as though it had $1 million because the
last two digits of the total assets were keyed in as
cents.
Data Completion
In addition to the tests mentioned above, missing
data problems must be addressed and returns that
are to be excluded from the tabulations must be
identified. The data completion process focuses on
these issues.
If the missing data items are from the balance
sheet, then imputation procedures are used. If data
for a whole return are missing because the return is
unavailable to SOI during the data capture process,
imputation procedures are also used in certain
cases.
A ratio-based imputation procedure is used to
estimate missing balance sheet items for all 1120
forms except those with less than 12-month
accounting periods. The ratios are determined using
the most recent data available, either the
corporation's 2000 return (if the corporation filed a
return in 2000) or the 1999 aggregate data for the
corporation's minor industrial group, which are the
most recent aggregate data available at the time the
editing for Tax Year 2001 begins. If the reported
items in the balance sheet do not balance (i.e., the
sum of asset items does not equal the sum of
liability and shareholders' equity items), then missing
items are imputed. If the total assets amount is
among the missing items, this item is imputed first
based on the ratio of total assets to business
receipts (or total receipts) from either the
corporation's 2000 return, or the 1999 aggregate
data for the corporation's minor industry. The other
missing asset and liability items are then imputed
based on the ratios so that the total of all asset items
and the total of all liability items are both equal to the
total assets amount, whether this amount was
reported or imputed. A detailed description of the
balance sheet imputation process is given in
reference [3]. The following chart shows the number
of sampled returns that had balance sheet items
imputed, as well as the percentages they represent
of the total sample sizes, for Tax Years 1998
through 2001.
For Tax Year 2001, none of the 41 imputed
returns had imputed total assets.
Data for unavailable critical corporations are
imputed in various ways, depending on what
information is available at the time the SOI database
is produced. Critical corporations include
corporations with total assets greater than or equal
to 5 percent of the total assets for their minor
industrial group, and corporations for which total
assets are over a specified limit, which is dependent
on form type or minor industry. For critical
corporations selected for the sample but unavailable
for statistical processing, taxpayer-surveyed data are
used. There are six such returns in the Tax Year
2001 data. For critical corporations not selected for
the sample, if the current tax return is not found in
any of the IRS Submission Processing Centers and
no other current tax data are available, data from the
previous year's return are used with adjustments for
tax law changes. There are 21 prior year returns in
the Tax Year 2001 data.
Another part of the data cleaning process is
identifying sampled returns that are not eligible for
the sample. The BMF system used for sample
selection can include duplicate tax returns and other
out-of-scope returns, such as returns of nonprofit
corporations, returns having neither current income
nor deductions, prior-year tax returns, amended or
tentative returns, returns of nonresident foreign
corporations having no effectively connected income
with a trade or business within the United States,
fraudulent returns, and returns of corporations
exempt from taxation.
Figure E on page 11 displays the number of
inactive sampled returns that were excluded from
tabulations, as well as the percentages they
Tax Year
Returns with
imputations
1998
1999
2000
2001
Number of
imputed returns
70
68
38
41
Percent imputed
0.05
0.05
0.03
0.03
2001 Corporation Returns – Description of the Sample and Limitations of the Data
11
represent of the total sample sizes, in Tax Years
1998 through 2001.
Figure E.--Number of Inactive Sampled Returns
for Tax Years 1998-2001
Tax Year
Type of inactive return
1998
1999
2000
2001
No Income or
Deductions
1,460
1,450
1,615
1,668
Duplicate*
799
770 1,044 1,421
Other**
3,645
3,725 3,684 4,294
Total
5,904
5,945
6,343 7,383
Percent of sample
4.29
4.22
4.38
5.02
* Duplicate returns are those that appear more than once in the sample.
** Includes prior-year returns.
Estimates of the number of active corporations by
form type for Tax Years 1998 through 2001 are
provided in Figure F below.
Figure F.--Estimated Number of Active Returns
for Tax Years 1998-2001
Tax Year
Form Type
1998
1999
2000
2001
1120
2,021,929 1,990,782 1,970,777 1,936,066
1120-A
211,801
191,769
186,177
185,114
1120S
2,588,088 2,725,775 2,860,478 2,986,486
1120-L
1,620
1,551
1,520
1,474
1120-PC
3,624
3,739
3,732
3,949
1120-RIC
9,897
10,318
10,991
11,318
1120-REIT
932
1,071
1,099
1,031
1120-F*
10,996
10,898
10,498
10,154
Total
4,848,888 4,935,904 5,045,274 5,135,591
* Foreign Insurance Companies file on Forms 1120-L and 1120-PC, but
are counted in Form 1120-F Tables 10 and 11.
Note: Detail may not add to total due to rounding.
Estimation
The estimates of the total number of corporations
and associated money amounts produced in this
report are based on weighted sample data. Either a
one-step process or a two-step process was used to
determine the weights, depending on the return's
form type.
Under the one-step process, the weights are
assigned as the reciprocal of the achieved sampling
rate, adjusted for missing returns, outliers, and
weight trimming. These weights, referred to as the
“national weights”, are used to produce the
aggregated total frequencies and money amounts
published in this report for Forms 1120-F, 1120-L,
1120-PC, 1120-RIC, 1120-REIT and Form 1120 with
Form 5735 attached, as well as for Form 1120 and
1120S returns that were sampled with certainty.
The two-step process was used to improve the
industry estimates for Form 1120-A, and Form 1120
and 1120S returns that are not self-representing.
The first stage is the one-step process described
above, which provides an initial weight for the return.
The second stage involves post-stratification by
industry and sample selection class. The industry
classification used for post-stratification weighting is
a two-digit code based on the North American
Industrial Classification System (NAICS). In the
course of this two-dimensional post-stratification,
certain cells may have small sample sizes. To
handle this problem, a bounded raking ratio
estimation approach is applied in order to determine
the final weight [4]. Restrictions are placed on the
raking process to produce final weights that fall
within the range /(2/3) x original weight to /(3/2) x
original weight. These final weights are used to
produce the aggregated frequency and money
amount estimates that are published in this report for
these forms.
Data Limitations and Measures of
Variability
Several extensive quality review processes are
used to improve data quality, beginning at the
sample selection stage with weekly monitoring of the
sample to ensure that the proper number of returns
is being selected. They continue through the data
collection, data cleaning, and data completion
procedures with consistency testing. Part of the
review process includes extensive comparisons
between the 2001 data and the 2000 data. A great
amount of effort is made at every stage of
processing to ensure data integrity.
Sampling Error
Since the corporation estimates are based on a
sample, they may differ from the population
aggregates that would have been obtained if a
complete census of all income tax returns had been
taken. The particular sample used to produce the
results in this report is one of a large number of
possible samples that could have been selected
under the same sample design. Estimates derived
from one of the possible samples could differ from
those derived from other samples and from the
population aggregates. The deviation of a sample
estimate from the average of all possible similarly
selected samples is called the sampling error. The
standard error (SE) is a measure of the average
magnitude of the sampling errors over all possible
samples.
The standard error is the most commonly used
measure of the sampling error and can be estimated
from the sample. The estimated standard error is
usually expressed as a percentage of the value
being estimated. This is called the estimated
coefficient of variation (CV) of the estimate, and it
can be used to assess the reliability of an estimate.
2001 Corporation Returns – Description of the Sample and Limitations of the Data
12
The estimated coefficient of variation of an
estimate is calculated by dividing the estimated
standard error by the estimate. Estimated
coefficients of variation by industrial groupings for
the estimated number of returns, as well as for
selected money amount estimates, are shown in
Table 1 beginning on page 29. For the estimated
number of returns by asset size and sector,
estimated coefficients of variation are given in Figure
G on page 13. The corresponding estimates can be
found in Table 4.
The estimated coefficient of variation, CV(X), can
be used to construct confidence intervals for the
estimate X. The estimated standard error, which is
required for the confidence interval, must first be
calculated. For example, the estimated number of
companies in the manufacturing sector with net
income and the corresponding estimated coefficient
of variation can be found in Table 1 and used to
calculate the estimated standard error:
SE(X) = X ? CV(X)
= 147,291 x 3.27/100
= 4,816
Assume that a 95-percent confidence interval for
the estimated number of returns in manufacturing is
desired. The 95-percent confidence interval is
constructed as follows:
X +- 2 ? SE(X) = 147,291 +- (2 x 4,816)
= 147,291 +- 9,632
Thus, the interval estimate is 137,659 returns to
156,923 returns. This means that if all possible
samples were selected under essentially the same
general conditions and using the same sample
design, and if an estimate and its estimated
standard error were calculated from each
sample,then approximately 95 percent of the
intervals from two standard errors below the
estimate to two standard errors above the estimate
would include the average estimate derived from all
possible samples. Thus, for a particular sample, it
can be said with 95-percent confidence that the
average of all possible samples is included in the
constructed interval. This average of the estimates
derived from all possible samples would be equal to
or near the value obtained from a census.
Nonsampling Error
In addition to sampling error, nonsampling error
can also affect the estimates. Nonsampling errors
can be classified into two groups: random errors,
whose effects may cancel out, and systematic
errors, whose effects tend to remain somewhat fixed
and result in bias.
Nonsampling errors can be categorized as
coverage errors, nonresponse errors, processing
errors, or response errors. These errors can be the
result of the inability to obtain information about all
returns in the sample, differing interpretations of tax
concepts or instructions by the taxpayer, inability of
a corporation to provide accurate information at the
time of filing (data are collected before auditing),
inability to obtain all tax schedules and attachments,
errors in recording or coding the data, errors in
collecting or cleaning the data, errors made in
estimating for missing data, and failure to represent
all population units.
Coverage Errors: Coverage errors in the SOI
Corporation data can result from the difference
between the time frame for sampling and the actual
time needed for filing and processing the returns.
As stated previously, many of the largest
corporations receive extensions to their filing periods
and, as a result, may file their returns after sample
selection has ended for that tax year. However, any
of the largest returns found are added into the file
until the final file is produced.
Coverage problems within industrial groupings in
the SOI Corporation study result from the way
consolidated returns may be filed. The Internal
Revenue Code permits a parent corporation to file a
single return, which includes the combined financial
data of the parent and all its subsidiaries. These
data are not separated into the different industries
but are entered only into the industry with the largest
receipts. Thus, there is undercoverage of financial
data within certain industries and overcoverage in
others. Coverage problems within industrial
groupings present a limitation on any analysis done
with the sample results.
Nonresponse Errors: Unit nonresponse occurs
when a sampled return is unavailable for SOI
processing. For example, other areas of the IRS
may have the return at the time it is needed for
statistical processing. These returns are termed
"unavailable returns." In 2001, there were 326
unavailable returns in the corporation study, which
constituted about 0.22 percent of the total sample
size. The number of unavailable returns and the
percentages of the total sample size for Tax Years
1998 through 2001 are shown in the following chart.
Tax Year
Unavailable
returns
1998
1999
2000
2001
Number of
unavailable returns
154
228
412
326
Percent
unavailable
0.11
0.16
0.28
0.22
2001 Corporation Returns – Description of the Sample and Limitations of the Data
13
Figure G.--Coefficients of Variation (CVs) for Number of Returns, by Asset Size and Sector, for Tax Year 2001
Size of total assets
Sector
All
asset
sizes
Zero
assets
$1
under
$ 500,000
$500,000
under
$1,000,000
$1,000,000
under
$5,000,000
(1)
(2)
(3)
(4)
(5)
All industries1. . . . . . . . . . . . . . . . . . . . .
0.19
2.87
0.34
0.81
0.35
Agriculture, forestry, fishing, and hunting
2.59
20.56
3.58
4.33
2.43
Mining . . . . . . . . . . . . . . . . . . . . . . . . . . .
6.89
39.25
9.78
15.19
7.61
Utilities . . . . . . . . . . . . . . . . . . . . . . . . . .
16.05
83.44
20.61
44.89
18.22
Construction . . . . . . . . . . . . . . . . . . . . . .
1.09
8.80
1.50
2.94
1.30
Manufacturing . . . . . . . . . . . . . . . . . . . . .
2.24
12.96
3.61
4.21
1.65
Wholesale and retail trade . . . . . . . . . . .
1.03
7.37
1.40
2.11
0.95
Transportation and warehousing . . . . . .
3.08
15.69
3.91
6.80
4.32
Information . . . . . . . . . . . . . . . . . . . . . . .
4.19
18.12
5.18
12.46
5.60
Finance and insurance . . . . . . . . . . . . . .
2.50
13.16
3.43
6.32
3.23
Real estate and rental and leasing . . . . .
1.24
8.32
1.75
2.31
1.50
Professional, scientific, and technical
services . . . . . . . . . . . . . . . . . . . . . . . .
1.18
7.25
1.43
5.18
3.04
Management of companies (holding
companies) . . . . . . . . . . . . . . . . . . . . .
5.97
18.51
9.76
15.38
7.24
Administrative and support and waste
management and remediation services
2.91
14.38
3.33
9.97
5.85
Educational services . . . . . . . . . . . . . . . .
7.38
31.67
8.30
29.93
14.50
Health care and social assistance . . . . .
1.52
12.48
1.79
8.30
5.45
Arts, entertainment, and recreation . . . .
4.06
16.95
5.09
10.47
5.24
Accommodation and food services . . . . .
1.71
15.15
2.16
6.05
2.75
Other services . . . . . . . . . . . . . . . . . . . . .
2.18
13.78
2.44
6.65
5.22
Size of total assets – continued
Sector
$5,000,000
under
$10,000,000
$10,000,000
under
$25,000,000
$25,000,000
under
$50,000,000
$50,000,000
under
$100,000,000
$100,000,000
under
$250,000,000
(6)
(7)
(8)
(9)
(10)
All Industries1. . . . . . . . . . . . . . . . . . . . .
1.01
0.03
0.07
0.05
0.05
Agriculture, forestry, fishing, and hunting
5.88
0.24
0.95
0.68
1.45
Mining . . . . . . . . . . . . . . . . . . . . . . . . . . .
8.29
0.31
0.90
0.66
0.86
Utilities . . . . . . . . . . . . . . . . . . . . . . . . . .
21.82
0.78
2.07
1.21
1.18
Construction . . . . . . . . . . . . . . . . . . . . . .
3.62
0.09
0.35
0.26
0.59
Manufacturing . . . . . . . . . . . . . . . . . . . . .
2.13
0.08
0.23
0.17
0.23
Wholesale and retail trade . . . . . . . . . . .
1.45
0.06
0.24
0.18
0.32
Transportation and warehousing . . . . . .
6.76
0.21
0.79
0.58
0.76
Information . . . . . . . . . . . . . . . . . . . . . . .
6.03
0.23
0.55
0.37
0.51
Finance and insurance . . . . . . . . . . . . . .
3.97
0.10
0.20
0.09
0.09
Real estate and rental and leasing . . . . .
2.70
0.10
0.43
0.32
0.61
Professional, scientific, and technical
services . . . . . . . . . . . . . . . . . . . . . . . .
4.50
0.20
0.52
0.37
0.50
Management of companies (holding
companies) . . . . . . . . . . . . . . . . . . . . .
8.45
0.18
0.41
0.16
0.16
Administrative and support and waste
management and remediation services
11.28
0.30
0.93
0.67
1.01
Educational services . . . . . . . . . . . . . . . .
25.55
0.86
2.98
1.76
2.55
Health care and social assistance . . . . .
8.81
0.33
1.09
0.71
1.10
Arts, entertainment, and recreation . . . .
9.18
0.32
1.21
0.84
1.16
Accommodation and food services . . . . .
6.51
0.23
0.87
0.65
0.96
Other services . . . . . . . . . . . . . . . . . . . . .
46.14
0.39
1.79
1.16
1.79
1Includes returns not allocable by sector.
1Includes returns not allocable by sector.
Note: Returns with assets of $250,000,000 or more are self-representing.
Processing Errors: Errors in recording, coding, or
processing the data can cause a return to be
sampled in the wrong sampling class. This type of
error is called a mis-stratification error. One
example of how a return might be mis-stratified is
the following: a corporation files a return with total
assets of $100,000,023 and net income of $5,000.
A processing error causes the last two digits of the
total assets to be keyed in as cents, so that the
return is classified according to total assets of
$1,000,000.23 and net income of $5,000.00. The
return would be mis-stratified according to the
incorrect value of the total assets stratifier. To adjust
for mis-stratification errors, only returns selected in a
non-certainty stratum which really belonged in a
certainty stratum were moved to this stratum.
2001 Corporation Returns – Description of the Sample and Limitations of the Data
14
Response errors: Response errors are due to
data being captured before audit. Some purely
arithmetical errors made by the taxpayer are
corrected during the data capture and cleaning
processes. Because of time constraints,
adjustments to a return during audit are not
incorporated into the SOI file.
References
[1] Jones, H. W., and McMahon, P. B. (1984),
"Sampling Corporation Income Tax Returns for
Statistics of Income, 1951 to Present,"
1984
Proceedings of the Section on Survey Research
Methods, American Statistical Association, pp. 437-
442.
[2] Harte, J. M. (1986), "Some Mathematical and
Statistical Aspects of the Transformed Taxpayer
Identification Number: A Sample Selection Tool
Used at IRS,"
1986 Proceedings of the Section on
Survey Research Methods, American Statistical
Association, pp. 603-608.
[3] ?berall, B. (1995), "Imputation of Balance Sheets
for the 1992 SOI Corporate Program,"
1995
Proceedings of the Section on Survey Research
Methods, American Statistical Association, pp. 275-
280.
[4] Oh, H. L. and Scheuren, F. J. (1987), "Modified
Raking Ratio Estimation,"
Survey Methodology,
Statistics Canada, Vol. 13, No. 2, pp. 209-219.
