HomeLatest ThreadsGreatest ThreadsForums & GroupsMy SubscriptionsMy Posts
DU Home » Latest Threads » Forums & Groups » Main » General Discussion (Forum) » Tax Deductions are a HUGE... » Reply #199
Introducing Discussionist: A new forum by the creators of DU

Response to indepat (Reply #198)

Tue Mar 25, 2014, 10:10 PM

199. But, you are being misled

As a tax accountant, I like to look into how these numbers get reported. For instance, a few years ago, people were mad that YUM Foods did not pay taxes. However, the issue was much more technical and hard to understand for those who don't do taxes. I will try to explain:

There are adjustments when preparing your income tax return called "temporary differences." An example is depreciation: book accounting and tax accounting depreciate fixed assets at different rates. Over, the long term, both will expense the entire cost of the asset, but the deductions will be different in any given year. In the case of YUM, they had expensed pension costs for years for book, but never made any cash contributions to their plan. For book, they recorded an expense and an offsetting liability on their balance sheet. Every year, they had to add back this expense on their income tax return, creating a deferred tax asset (future tax deduction when a cash payment is made). In the year in question, they made a HUGE cash contribution to their pension plan, (they reduced cash and the offsetting liability for book, since the expenses had already been recorded). This resulted in them getting to deduct all the book expenses they had added back for years. In reality, this is very favorable tax treatment for the government as the deduction is deferred for years. It was misleading for people to claim outrage over this, as the government benefitted greatly from this treatment.

In the case of GE, their tax rate looks low since so much of their income is earned overseas (ie the product is made and sold overseas). The US is one of only a few countries that taxes worldwide income (ie income not earned in their country). However, that income is not taxed until it is repatriated. Thus, the shareholders have ZERO access to that money until it it comes back to the US and taxes are paid. When that happens, GE will have a tax rate well over the income (ie a tax rate of many multiples of 100%).

Now, there are companies like Apple that hide IP overseas to artificially transfer profits outside the US and that should definitely be changed.

Reply to this post

Back to OP Alert abuse Link to post in-thread

Always highlight: 10 newest replies | Replies posted after I mark a forum
Replies to this discussion thread
Arrow 227 replies Author Time Post
Sarah Ibarruri Mar 2014 OP
PumpkinAle Mar 2014 #1
Sarah Ibarruri Mar 2014 #4
Ikonoklast Mar 2014 #23
tayeboss Mar 2014 #2
Sarah Ibarruri Mar 2014 #5
JJChambers Mar 2014 #3
yeoman6987 Mar 2014 #6
yeoman6987 Mar 2014 #7
theboss Mar 2014 #8
JJChambers Mar 2014 #10
theboss Mar 2014 #11
JJChambers Mar 2014 #12
theboss Mar 2014 #13
JJChambers Mar 2014 #14
FreeJoe Mar 2014 #85
NutmegYankee Mar 2014 #135
SickOfTheOnePct Mar 2014 #9
badtoworse Mar 2014 #15
Sarah Ibarruri Mar 2014 #16
badtoworse Mar 2014 #17
Sarah Ibarruri Mar 2014 #18
badtoworse Mar 2014 #19
Laura PourMeADrink Mar 2014 #24
badtoworse Mar 2014 #30
Laura PourMeADrink Mar 2014 #106
Sarah Ibarruri Mar 2014 #35
joeglow3 Mar 2014 #42
Sarah Ibarruri Mar 2014 #45
joeglow3 Mar 2014 #47
Sarah Ibarruri Mar 2014 #68
joeglow3 Mar 2014 #79
badtoworse Mar 2014 #62
Sarah Ibarruri Mar 2014 #64
oldhippie Mar 2014 #69
badtoworse Mar 2014 #74
joeglow3 Mar 2014 #115
Capt. Obvious Mar 2014 #210
joeglow3 Mar 2014 #219
Nuclear Unicorn Mar 2014 #109
Enthusiast Mar 2014 #202
delta17 Mar 2014 #142
treestar Mar 2014 #125
badtoworse Mar 2014 #132
treestar Mar 2014 #134
joeglow3 Mar 2014 #136
Enthusiast Mar 2014 #203
joeglow3 Mar 2014 #207
badtoworse Mar 2014 #138
joeglow3 Mar 2014 #28
Sarah Ibarruri Mar 2014 #34
joeglow3 Mar 2014 #37
Sarah Ibarruri Mar 2014 #40
dawg Mar 2014 #213
hfojvt Mar 2014 #26
Sarah Ibarruri Mar 2014 #36
joeglow3 Mar 2014 #39
Sarah Ibarruri Mar 2014 #41
joeglow3 Mar 2014 #44
Sarah Ibarruri Mar 2014 #46
joeglow3 Mar 2014 #48
Enthusiast Mar 2014 #204
joeglow3 Mar 2014 #209
Enthusiast Mar 2014 #212
joeglow3 Mar 2014 #214
Enthusiast Mar 2014 #205
joeglow3 Mar 2014 #208
dawg Mar 2014 #215
Sarah Ibarruri Mar 2014 #222
hfojvt Mar 2014 #51
joeglow3 Mar 2014 #52
hfojvt Mar 2014 #55
joeglow3 Mar 2014 #57
hfojvt Mar 2014 #77
joeglow3 Mar 2014 #116
oldhippie Mar 2014 #61
Sarah Ibarruri Mar 2014 #63
hfojvt Mar 2014 #86
Sarah Ibarruri Mar 2014 #88
joeglow3 Mar 2014 #117
hfojvt Mar 2014 #128
joeglow3 Mar 2014 #100
Sarah Ibarruri Mar 2014 #103
joeglow3 Mar 2014 #107
Enthusiast Mar 2014 #206
Sarah Ibarruri Mar 2014 #223
Adrahil Mar 2014 #127
Drahthaardogs Mar 2014 #59
Sarah Ibarruri Mar 2014 #65
oldhippie Mar 2014 #71
FreeJoe Mar 2014 #94
Hoyt Mar 2014 #78
xchrom Mar 2014 #20
Sarah Ibarruri Mar 2014 #43
Le Taz Hot Mar 2014 #21
Sarah Ibarruri Mar 2014 #38
DrDan Mar 2014 #22
taught_me_patience Mar 2014 #25
DrDan Mar 2014 #27
joeglow3 Mar 2014 #32
Hoyt Mar 2014 #81
taught_me_patience Mar 2014 #147
Hoyt Mar 2014 #148
Sarah Ibarruri Mar 2014 #162
Hoyt Mar 2014 #172
Sarah Ibarruri Mar 2014 #174
hfojvt Mar 2014 #29
NutmegYankee Mar 2014 #49
hfojvt Mar 2014 #53
NutmegYankee Mar 2014 #60
hfojvt Mar 2014 #129
NutmegYankee Mar 2014 #131
hfojvt Mar 2014 #152
NutmegYankee Mar 2014 #153
hfojvt Mar 2014 #194
NutmegYankee Mar 2014 #195
DrDan Mar 2014 #54
hfojvt Mar 2014 #67
DrDan Mar 2014 #108
Ilsa Mar 2014 #31
Sarah Ibarruri Mar 2014 #33
mainer Mar 2014 #113
Sarah Ibarruri Mar 2014 #163
mainer Mar 2014 #180
Sarah Ibarruri Mar 2014 #182
mainer Mar 2014 #184
Sarah Ibarruri Mar 2014 #186
mainer Mar 2014 #188
Sarah Ibarruri Mar 2014 #190
oldhippie Mar 2014 #192
Ilsa Mar 2014 #137
mainer Mar 2014 #181
Ilsa Mar 2014 #183
mainer Mar 2014 #187
Ilsa Mar 2014 #189
PasadenaTrudy Mar 2014 #50
Dreamer Tatum Mar 2014 #56
DrDan Mar 2014 #58
PasadenaTrudy Mar 2014 #121
DrDan Mar 2014 #123
Sarah Ibarruri Mar 2014 #72
Vashta Nerada Mar 2014 #101
Skittles Mar 2014 #143
PasadenaTrudy Mar 2014 #144
oldhippie Mar 2014 #66
Sarah Ibarruri Mar 2014 #70
oldhippie Mar 2014 #73
Sarah Ibarruri Mar 2014 #76
oldhippie Mar 2014 #80
badtoworse Mar 2014 #141
joeglow3 Mar 2014 #83
Sarah Ibarruri Mar 2014 #90
joeglow3 Mar 2014 #95
Sarah Ibarruri Mar 2014 #98
joeglow3 Mar 2014 #102
LittleBlue Mar 2014 #75
Hoyt Mar 2014 #84
Sarah Ibarruri Mar 2014 #87
Hoyt Mar 2014 #91
Sarah Ibarruri Mar 2014 #93
Hoyt Mar 2014 #97
Sarah Ibarruri Mar 2014 #99
Hoyt Mar 2014 #104
SickOfTheOnePct Mar 2014 #120
EX500rider Mar 2014 #130
Nuclear Unicorn Mar 2014 #139
oldhippie Mar 2014 #126
LittleBlue Mar 2014 #92
Sarah Ibarruri Mar 2014 #96
LittleBlue Mar 2014 #114
Nuclear Unicorn Mar 2014 #140
mainer Mar 2014 #110
YarnAddict Mar 2014 #171
Sarah Ibarruri Mar 2014 #175
FreeJoe Mar 2014 #82
Hoyt Mar 2014 #89
mainer Mar 2014 #105
Sarah Ibarruri Mar 2014 #165
Nuclear Unicorn Mar 2014 #173
mainer Mar 2014 #179
Sarah Ibarruri Mar 2014 #185
mainer Mar 2014 #191
Sarah Ibarruri Mar 2014 #193
PoliticAverse Mar 2014 #227
YarnAddict Mar 2014 #111
Sarah Ibarruri Mar 2014 #166
YarnAddict Mar 2014 #168
Sarah Ibarruri Mar 2014 #176
Throd Mar 2014 #112
Sarah Ibarruri Mar 2014 #167
Token Republican Mar 2014 #118
TexasBushwhacker Mar 2014 #170
indepat Mar 2014 #119
joeglow3 Mar 2014 #150
indepat Mar 2014 #196
joeglow3 Mar 2014 #197
indepat Mar 2014 #198
LineLineLineLineLineLineReply But, you are being misled
joeglow3 Mar 2014 #199
indepat Mar 2014 #225
Sarah Ibarruri Mar 2014 #161
WhaTHellsgoingonhere Mar 2014 #122
Sarah Ibarruri Mar 2014 #159
WhaTHellsgoingonhere Mar 2014 #177
Sarah Ibarruri Mar 2014 #178
treestar Mar 2014 #124
Sarah Ibarruri Mar 2014 #160
Thinkingabout Mar 2014 #133
Octafish Mar 2014 #145
Hoyt Mar 2014 #149
Sarah Ibarruri Mar 2014 #158
Lunacee_2013 Mar 2014 #146
Sarah Ibarruri Mar 2014 #157
Lunacee_2013 Mar 2014 #200
gopiscrap Mar 2014 #151
Sarah Ibarruri Mar 2014 #156
Rex Mar 2014 #154
Sarah Ibarruri Mar 2014 #155
Rex Mar 2014 #164
Sarah Ibarruri Mar 2014 #169
Laelth Mar 2014 #201
dawg Mar 2014 #211
mainer Mar 2014 #216
dawg Mar 2014 #218
Boom Sound 416 Mar 2014 #217
dawg Mar 2014 #220
Boom Sound 416 Mar 2014 #221
joeglow3 Mar 2014 #224
PoliticAverse Mar 2014 #226
Please login to view edit histories.