# Regression Analysis: IRS Audit

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The Transactional Records Access Clearinghouse at Syracuse University reported data showing the odds of an Internal Revenue Service audit. The following table shows the average adjusted gross income reported and the percent of the returns that were audited for 20 selected IRS districts.

Instructions:

1. write the regression equation,

2. interpret the regression constant and regression coefficient,

3. forecast a value for the dependent variable,

4. test the significant of the regression coefficient with alpha equaling .05,

5. test the overall significant of the regression model,

6. interpret the coefficient of determination, and

7. are there any violations of the general linear model? explain.

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The solution provides step by step method for the calculation of regression analysis. Formula for the calculation and Interpretations of the results are also included.

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The Transactional Records Access Clearinghouse at Syracuse University reported data showing the odds of an Internal Revenue Service audit. The following table shows the average adjusted gross income reported and the percent of the returns that were audited for 20 selected IRS districts.

Answers

1. Write the regression equation.

The general form of simple linear regression is Y= a + bX

Where Y is the dependent variable and X is the independent variable, a and be are known as the regression coefficients .They are estimated by the method of least squares. The estimates of a and b are given by

The parameter b measures the impact of unit change in X on the dependent variable Y. It is the slope of the regression line. The parameter a is the value of Y when X=0. It is known as the Intercept term.

The regression ...

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