According to a report done by CNN Money, General Motors will save an estimated $14 billion in domestic tax breaks and up to $19 billion in global tax breaks in the years to come, according to a company filing. Ironically, the future tax breaks come from the previous years of operating in the red, as such breaks are usually reserved for companies struggling to stay afloat.
Interestingly, companies that elect to go through bankruptcy tend to lose such perks, as the debts shed during the process tend to balance out the previous losses.
Maybe the retention of this massive tax break shows remarkable work of the bankruptcy lawyers used that helped the company shed around $30 billion in debt during its incredibly brief 40-day bankruptcy purge. Or maybe something else is afoot here. The reasons aren’t quite clear, but both GM and the U.S. Treasury insist that this isn’t some sort of sweetheart deal and that any company that goes through bankruptcy can retain such tax breaks.
This morning, GM posted $4.7 billion in annual net income this morning for 2010, the first full year operating as a new company (in legal terms).
Source: CNN Money