The paper shows that the relationship between book income and tax income for U.S. corporations changed in the late 1990s due to increased sheltering activity. This was mainly caused by differences in how depreciation, foreign income, and employee compensation were treated. The discrepancy between book and tax income grew significantly during this time, with a large portion of the difference not being explained by these factors. The researchers developed a model that suggests this breakdown is due to higher levels of sheltering, rather than just earnings management.