This study furthers our understanding of taxpayer behavior by introducing an alternative theory that might provide a better explanation of taxpayer behavior than prospect theory: the house money effect.  Prospect theory posits that taxpayers in a refund situation act conservatively.  The house money effect suggests that taxpayers expecting to receive a refund act aggressively up to the point where the potential exists to eliminate the refund, at which point taxpayers become conservative.  The theory is that the refund is viewed as a gain, and thus taxpayers are playing with “house money†as long as the gain (refund) is not eliminated.  The expectation to receive a refund can be created two ways: from a preliminarily determined current year tax position, and from a prior year’s tax position.  Both tax positions will be tested.