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GM's sweetheart tax deal
NEW YORK (CNNMoney) -- The U.S. Treasury is giving up $14 billion in tax revenue because of a sweetheart deal it's giving General Motors.
The automaker is expected to post its first profitable year since 2004 when it reports fourth-quarter results on Thursday. But GM (GM) won't have to worry about being hit with a big tax bill because billions in previous losses will provide shelter for years to come.
That break will reduce GM's U.S. tax bill by an estimated $14 billion in the coming years, and its global taxes by close to $19 billion, according to a company filing.
Companies typically get a break on future taxes because of past losses. But in most cases they lose that tax break during bankruptcy, because the losses are offset by the "income" the company receives from shedding its debt.
The power behind GM's throne
Since the company shed $30 billion in debt during bankruptcy, it should have wiped out most of the tax break. GM even warned it expected to lose those tax breaks shortly before filing for Chapter 11 protection.
But somehow, that never happened, and the automaker was able to keep most of its tax breaks, essentially receiving a $14 billion "gift" from the government.
While it's unclear why GM was allowed to carry over its losses, some experts insist that GM got preferential treatment.
http://money.cnn.com/2011/02/23/news/companies/gm_bailout/index.htm?cnn=yes&hpt=Sbin
i wonder how much more smoke and mirrors obama's admin is using to make gm look profitable....
i thought the issue was raising tax on corps and the rich...why is it here a good thing to let GM get a 14 billion dollar gift from the government? is this another bailout?
NEW YORK (CNNMoney) -- The U.S. Treasury is giving up $14 billion in tax revenue because of a sweetheart deal it's giving General Motors.
The automaker is expected to post its first profitable year since 2004 when it reports fourth-quarter results on Thursday. But GM (GM) won't have to worry about being hit with a big tax bill because billions in previous losses will provide shelter for years to come.
That break will reduce GM's U.S. tax bill by an estimated $14 billion in the coming years, and its global taxes by close to $19 billion, according to a company filing.
Companies typically get a break on future taxes because of past losses. But in most cases they lose that tax break during bankruptcy, because the losses are offset by the "income" the company receives from shedding its debt.
The power behind GM's throne
Since the company shed $30 billion in debt during bankruptcy, it should have wiped out most of the tax break. GM even warned it expected to lose those tax breaks shortly before filing for Chapter 11 protection.
But somehow, that never happened, and the automaker was able to keep most of its tax breaks, essentially receiving a $14 billion "gift" from the government.
While it's unclear why GM was allowed to carry over its losses, some experts insist that GM got preferential treatment.
http://money.cnn.com/2011/02/23/news/companies/gm_bailout/index.htm?cnn=yes&hpt=Sbin
i wonder how much more smoke and mirrors obama's admin is using to make gm look profitable....
i thought the issue was raising tax on corps and the rich...why is it here a good thing to let GM get a 14 billion dollar gift from the government? is this another bailout?
