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GE finds a way to avoid paying taxes
GE: 7,000 tax returns, $0 U.S. tax bill
By Annalyn Censky, staff reporterApril 16, 2010: 11:52 AM ET
NEW YORK (CNNMoney.com) -- General Electric filed more than 7,000 income tax returns in hundreds of global jurisdictions last year, but when push came to shove, the company owed the U.S. government a whopping bill of $0.
How'd it pull off that trick? By losing lots of money.
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Tax bills for 5 corporate giants
The 2009 income tax bills for America's biggest companies ranged from $0 to $15 billion. Here's why.
View photosGE had plenty of earnings last year -- just not in the United States. For tax purposes, the company's U.S. operations lost $408 million, while its international businesses netted a $10.8 billion profit.
That left GE (GE, Fortune 500) with no U.S. profit left for Uncle Sam to tax. Corporations typically face a 35% federal income tax on their earnings. Thanks to its deductions and adjustments, GE reported an actual U.S. federal income tax rate of negative 10.5%. It got to add a "tax benefit" of $1.1 billion back into its reported earnings.
"This is the first time in at least decades that GE has reported negative U.S. pretax income and it reflects the worst economy since the Great Depression," Anne Eisele, GE's director of financial communications, said via e-mail.
But what about the $10.8 billion profit overseas? GE is "indefinitely" deferring income tax payments on those profits, Eisele said.
It may seem like accounting magic, but it's completely legit.
GE isn't the only "Top 5" company on this year's Fortune 500 list that owed no income taxes. Bank of America (BAC, Fortune 500), which suffered major losses in 2009, included a tax benefit of $1.9 billion in its annual profit.
"That's one way of escaping taxes," said Scott Hodge, president of the Tax Foundation. "Companies get to deduct their losses, so if there's no earnings, then they pay no income tax."
But GE isn't exactly escaping all tax-related pain: The company paid almost $23 billion in taxes to governments around the world from 2000 to 2009, Eisele said.
Plus, paying the accountants to crank out 7,000 tax returns can't be cheap.
And then there's all the lawyers needed to defend those returns. GE filed tax paperwork in more than 250 jurisdictions around the world last year. "We are under examination or engaged in tax litigation in many of these jurisdictions," the company dryly notes in its annual report.
GE may not owe the IRS, but it still has to file -- and its filings are epic.
In 2006, as the IRS ramped up its corporate e-filing program, the tax agency actually issued a celebratory press release when it processed GE's tax return. On paper, the return -- the nation's largest -- would have totaled a massive 24,000 pages. But instead, the IRS was able to upload the 237 MB document in under an hour.
Reading it, though, is apparently taking a bit longer. The IRS is currently auditing GE's tax returns for 2003-2007.
By Annalyn Censky, staff reporterApril 16, 2010: 11:52 AM ET
NEW YORK (CNNMoney.com) -- General Electric filed more than 7,000 income tax returns in hundreds of global jurisdictions last year, but when push came to shove, the company owed the U.S. government a whopping bill of $0.
How'd it pull off that trick? By losing lots of money.
Facebook Digg Twitter Buzz Up! Email Print Comment on this story
Tax bills for 5 corporate giants
The 2009 income tax bills for America's biggest companies ranged from $0 to $15 billion. Here's why.
View photosGE had plenty of earnings last year -- just not in the United States. For tax purposes, the company's U.S. operations lost $408 million, while its international businesses netted a $10.8 billion profit.
That left GE (GE, Fortune 500) with no U.S. profit left for Uncle Sam to tax. Corporations typically face a 35% federal income tax on their earnings. Thanks to its deductions and adjustments, GE reported an actual U.S. federal income tax rate of negative 10.5%. It got to add a "tax benefit" of $1.1 billion back into its reported earnings.
"This is the first time in at least decades that GE has reported negative U.S. pretax income and it reflects the worst economy since the Great Depression," Anne Eisele, GE's director of financial communications, said via e-mail.
But what about the $10.8 billion profit overseas? GE is "indefinitely" deferring income tax payments on those profits, Eisele said.
It may seem like accounting magic, but it's completely legit.
GE isn't the only "Top 5" company on this year's Fortune 500 list that owed no income taxes. Bank of America (BAC, Fortune 500), which suffered major losses in 2009, included a tax benefit of $1.9 billion in its annual profit.
"That's one way of escaping taxes," said Scott Hodge, president of the Tax Foundation. "Companies get to deduct their losses, so if there's no earnings, then they pay no income tax."
But GE isn't exactly escaping all tax-related pain: The company paid almost $23 billion in taxes to governments around the world from 2000 to 2009, Eisele said.
Plus, paying the accountants to crank out 7,000 tax returns can't be cheap.
And then there's all the lawyers needed to defend those returns. GE filed tax paperwork in more than 250 jurisdictions around the world last year. "We are under examination or engaged in tax litigation in many of these jurisdictions," the company dryly notes in its annual report.
GE may not owe the IRS, but it still has to file -- and its filings are epic.
In 2006, as the IRS ramped up its corporate e-filing program, the tax agency actually issued a celebratory press release when it processed GE's tax return. On paper, the return -- the nation's largest -- would have totaled a massive 24,000 pages. But instead, the IRS was able to upload the 237 MB document in under an hour.
Reading it, though, is apparently taking a bit longer. The IRS is currently auditing GE's tax returns for 2003-2007.
No disagreement here. I have gone way beyond anger & back in trying to understand the madness of what has been going on. Any more when I part ways with people, I say...keep your sanity. We need our wits about us to deal with this. My heart goes out to you in your situation because the costs of care shouldn't be so out of reach and touch of the majority.
Good post. I suggested that politicians live like the people on the streets for a year or two without any one bailing them out except applying for the aids that people on the streets try for. I believe their perspective would change.
History reflects what happens when people get too comfortable and take things for granted. Thank you for sharing...putting a face to the need.
I think others have tried to get benefits for their pets too...must be catching on.
I hope you sleep well & get a good rest
Good post. I suggested that politicians live like the people on the streets for a year or two without any one bailing them out except applying for the aids that people on the streets try for. I believe their perspective would change.
History reflects what happens when people get too comfortable and take things for granted. Thank you for sharing...putting a face to the need.
I think others have tried to get benefits for their pets too...must be catching on.
I hope you sleep well & get a good rest
Hey D: I lied. I'll take a "lie down" break after this. I would say under the current economic status of the country, FOWL is rather an understatement. Simply because there is a law to support this deferral by giant multinational corporations does not mean it is correct. Just a few weeks ago the U.S. Supreme Court in a split decision (I think 5-4) ruled that multinational corporations, Pharmaceutical Companies, Insurance Companies and the like can now give "unlimited" funds to lobbyists and PAC's (political action committee's) which now allows these corporations to create the laws we are forced to live by.
From all appearances the United States Economy has gone beyond the point of no return, and the politicians in office know this and are feathering their already obscenely gigantic nest(s) while the gettin is good. People are starving here in America, dying for lack of health care, and wandering the streets in search of shelter with little babies under their arms while our elected representatives are handing bailouts to just about every industry giant on the planet AND voting themselves in very large wages, benefits, and retirement bonuses. FOWL??? I believe the appropriate term is TREASON.
BUT... I have the answer! Make it mandatory for ALL Public Offices and Officials serve a term of 2 years at minimum wage, with an amendment that were they to accept a "gift" or "campaign contribution" from any one a mandatory 25-to-life prison sentence if they are caught. They would be bailing out of Office like fleas off the backs of rats jumping of a drowning ship, and the ONLY people who would be willing to take office under those conditions would be those who REALLY cared out America and it's people. Problem solved.
On a more personal note, I have figured out what to do regarding my own situation with the cost of a year of chemotherapy eating up my entire life-savings and leaving me on SSI, where I survive on $674 a month, with a piece of paper that used to be for my health being virtually worthless. I am applying for full Welfare benefits for my cat, Sugar Ray O'Shaughnessy. I know this sounds like I have lost my mind, and I'm pretty sure I did, but I think I remember where I forgot it. Here's how it works:
1. My cat, name not withstanding is an Egyptian Mao and as such is an illegal alien
2. He cannot read, write, or speak American
3. He cannot work to help defray his own living costs
4. He was shot when he was eight months old and as such is disabled
5. He cannot cook, or even fill out a resume due to his disability
6. He cannot help with food, shelter, electricity, public utilities, or healthcare insurance
7. He is totally dependent on me for the basic necessities of life
8. He cannot be denied because that is discrimination
9 He cannot apply for citizenship due to his disabilities, and lastly,
10. I am permanently disabled under the Americans with Disabilities Act so I need him.
So, since that is the same criteria for everyone else who has never paid a dime into the system got their benefits under, I will be at the Welfare Office on Monday. I urge you to do the same. Thank you, and Good Night.
From all appearances the United States Economy has gone beyond the point of no return, and the politicians in office know this and are feathering their already obscenely gigantic nest(s) while the gettin is good. People are starving here in America, dying for lack of health care, and wandering the streets in search of shelter with little babies under their arms while our elected representatives are handing bailouts to just about every industry giant on the planet AND voting themselves in very large wages, benefits, and retirement bonuses. FOWL??? I believe the appropriate term is TREASON.
BUT... I have the answer! Make it mandatory for ALL Public Offices and Officials serve a term of 2 years at minimum wage, with an amendment that were they to accept a "gift" or "campaign contribution" from any one a mandatory 25-to-life prison sentence if they are caught. They would be bailing out of Office like fleas off the backs of rats jumping of a drowning ship, and the ONLY people who would be willing to take office under those conditions would be those who REALLY cared out America and it's people. Problem solved.
On a more personal note, I have figured out what to do regarding my own situation with the cost of a year of chemotherapy eating up my entire life-savings and leaving me on SSI, where I survive on $674 a month, with a piece of paper that used to be for my health being virtually worthless. I am applying for full Welfare benefits for my cat, Sugar Ray O'Shaughnessy. I know this sounds like I have lost my mind, and I'm pretty sure I did, but I think I remember where I forgot it. Here's how it works:
1. My cat, name not withstanding is an Egyptian Mao and as such is an illegal alien
2. He cannot read, write, or speak American
3. He cannot work to help defray his own living costs
4. He was shot when he was eight months old and as such is disabled
5. He cannot cook, or even fill out a resume due to his disability
6. He cannot help with food, shelter, electricity, public utilities, or healthcare insurance
7. He is totally dependent on me for the basic necessities of life
8. He cannot be denied because that is discrimination
9 He cannot apply for citizenship due to his disabilities, and lastly,
10. I am permanently disabled under the Americans with Disabilities Act so I need him.
So, since that is the same criteria for everyone else who has never paid a dime into the system got their benefits under, I will be at the Welfare Office on Monday. I urge you to do the same. Thank you, and Good Night.
I will echo that FOWL!!!!!! Lawyers .....professors.....financial wizards......crooks?.....just how do they get away with this? If we are overpaid $2 on unemployment, they are sending the notices to pay up!!! How can they let this much dough through????
I dont make much money but IRS keeps me on my toes, so how do these big money makers get away with so much? FOWL!!!!
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