Gm $45 Billion Tax Break |
Detroit Bureau on Twitter

Posts Tagged ‘gm $45 billion tax break’

GM Could Get $45 Billion Tax Break

Treasury could meanwhile lose over $5 billion on stock sale.

by on Nov.03, 2010

GM CEO Dan Akerson will begin hyping the company's IPO in the coming days.

General Motors could be in for the sort of tax break that would make even the most pro-business lawmaker blush, a savings of as much as $45 billion that comes as part of its government-financed restructuring.

GM is expected to report its third quarterly profit in a row, this month, a welcome bit of news for a company that ran up tens of billions of dollars in losses in the years leading up to its 2009 bankruptcy – and which is now planning to go public again, with an IPO expected to be held around November 18th.

Those losses, which would normally be wiped out by the Chapter 11 filing, will instead be applicable as so-called tax-loss carry-forwards, the Wall Street Journal reports.  That comes as the result of a little-known ruling on the government’s TARP program, which has been used to rescue troubled financial institutions, as well as automakers GM and Chrysler.

The tax savings for the giant maker would come to $45.4 billion.  That’s on top of the billions of dollars GM saved when much of its debt, as well as significant bondholder and shareholder equity, was wiped out when the maker emerged from bankruptcy protection in July 2009.

Your News Source! Click To Subscribe!

Tax-loss carry-forwards permit a business to shield profits from federal taxes for up to 20 years by offsetting earnings against prior-year losses, as well as expenses for such things as pension programs.