Wednesday, February 29, 2012

The Other GM Bailout

The Other GM Bailout: Corporations in the red, as GM was for years, are allowed to carry forward net operating losses that reduce their future tax liability when they are making money. GM had accumulated about $45 billion in such profit-shielding chits by 2008, with a book value of about $18 billion. When companies enter bankruptcy, carry-forwards disappear or are greatly limited under IRS section 382, which kicks in when ownership changes by more than 50 percentage points.

The point is to prevent companies from buying assets solely for tax arbitrage or tax avoidance. But starting in 2009, Treasury began to issue regulatory "notices" that suspend this law when it comes to Treasury-owned stock. The provisions also apply to AIG and Citigroup.

so we taxpayers gave money in a bailout and then lost money in potential tax revenue.

Sorry liberals, you can't blame this one on greedy big business. This is all government doing.

1 comment:

Jianna Gonzalez said...

Keep on blogging.