It's not only legal, but in some cases necessary to keep separate books for tax purposes vs. reporting to shareholders. For example, the method most companies use to depreciate assets for tax purposes (MACRS) is not acceptable for reporting to hhareholders because the write-off is too fast (an asset may really have a 10-year life, which would be the required write-off period for reporting to shareholders, but be depreciated over 7 years under the tax law). Requirements for reporting to shareholders are based on generally accepted accounting principles, which are developed mainly by the Financial Accounting Standards Board with input from the SEC, while reporting for tax purposes is governed by the tax code and IRS regulations. The two frequently contradict each other, requiring two sets of books. Sorry for the accounting class, but I am a university accounting professor. Class dismissed. :D Thanks for information. Can companies intentionally mislead the public/IRS and have it be legal? Well I work for GE so I am pretty sure they are under quite a bit of scritiny over such things. As for the question of misleading shareholders that is what lands people in jail. The numbers that are reported for tax purposes are not open to the public, so there wouldn't be confusion on the two sets that are being reported. Thanks for the refresher NCCubbie, I have took my MBA accounting class 2 yrs ago and its good to hear that I rememered something from it :) Additionally, many companies keep additional "sets of books" for performance measurement distinct from financial reporting. Financial reporting is covered by GAAP, but if you want to use different methods internally for determining bonuses, capital spending, etc., that's not only legal but can make good sense. Many of the rules in GAAP are arbitrary (to eliminate or reduce judgement calls, etc.). Just looked at their 10-K, and they only report on 2 segments - publishing and broadcasting/entertainment. That means they don't have to break out the Cubs separately from broadcasting in terms of public reporting, so the pricing of internal transactions between the Cubs and the broadcasting unit would not impact their public disclosure.