Thursday, May 3, 2012
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.
Full story here.