FOR many economic problems it is important to know how business expectations behave. Are they external to the system or are they related to current or past economic events? And, if the latter, how are they related? Expansion of our knowledge in this area meets with rather formidable difficulties. If one proceeds on the basis of a questionnaire, the answers procured may fail to capture the real expectation of a business manager. His answer may be colored by the use that he believes will be made of the information, or he may be annoyed at the intrusion of an irrelevant question, or at its difficulty, and give off-the-cuff replies. Objective data would be of real usefulness, fragmentary or incomplete as they might be. For more than a decade corporations were required to pay federal taxes which implicitly called for a profit forecast of varying lengths of time. Under the capital-stock tax and declaredvalue excess-profits tax, repealed by the Revenue Act of I945, the more precisely could income be forecast, the lower would be total tax liabilities of the firm. A direct monetary reward was granted for precision of estimate. The data these taxes provide are unique in that the forecaster had to place a bet on his guess. Subject to the qualifications discussed later, these data for the period I933 to I94I seem to bear out the conclusion that expected future income was intimately related to current income. A change in current income led to a change in expected future income of almost an equal amount (94 per cent of the change in current income).