General Motors Co., the Detroit automaker that underwent Chapter 11 restructuring last year, will receive up to $45 billion in tax breaks due to its Troubled Asset Relief Program (TARP) bailout, the Wall Street Journal reported Wednesday.
Reports from federal regulators obtained by the Journal show that GM won’t have to dole out taxes on future profits to the tune of $45 billion due to a clause in the TARP which mandates that losses in government-funded restructuring can offset tax liabilities after the bankruptcy process.
Normally, companies that change ownership during restructuring aren’t privy to these tax benefits and have limits to tax breaks imposed by the government.
However, “the Internal Revenue Service has decided that the government’s involvement with these companies, both its acquisitions plus its disposals of their stock, means they should be exempt” from the rule, Robert Willens, a tax consultant located in New York, told the Journal.
Reports from federal regulators obtained by the Journal show that GM won’t have to dole out taxes on future profits to the tune of $45 billion due to a clause in the TARP which mandates that losses in government-funded restructuring can offset tax liabilities after the bankruptcy process.
Normally, companies that change ownership during restructuring aren’t privy to these tax benefits and have limits to tax breaks imposed by the government.
However, “the Internal Revenue Service has decided that the government’s involvement with these companies, both its acquisitions plus its disposals of their stock, means they should be exempt” from the rule, Robert Willens, a tax consultant located in New York, told the Journal.
The $45 billion that General Motors will save in potential taxes includes nearly $19 billion in carry-forwards, according to the Journal, citing GM’s documents filed before its IPO unveiling this week.
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