Bailout Watch 577: New GM Is Old GM . . . for Tax Purposes
Wall Street Journal reports that GM will be allowed to carry-forward $16 billion in net losses from “Old GM,” creating a massive tax shelter. Normally this isn’t allowed to happen as the tax code has specific provisions to prevent firms from buying other firms strictly for their tax losses. Under normal conditions, tax losses die with the old firm when it completes its bankruptcy proceedings. Not so with GM, which sought preservation of tax losses as part and parcel of its 363 sale. “The result seems to retain the cake while eating it,” says Duke law professor Jeffrey Coyne. “They get to sell quickly and without the many procedural protections because this is not a plan. They get to keep the [net operating losses] using a provision that requires the transfer to happen as part of a plan.” And yet another hidden bailout sneaks through, unlikely to ever appear in a final accounting of the cost of rescuing GM.
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jkross22: This wasn’t a bankruptcy filing at all. No cleaning house of leadership, carrying forward debt to offset “profits”… Where is our lovely media covering this joke? And they still get to count Pontiac, Saab, Hummer and Saturn in their sales figures so that they can pretend to still outsell Ford.
anyone wonder why there is no financial statement for last year? they're criminals and the public is stupid.
@menno - it would be a GM accountant or GM tax lawyer that came up with that idea, not the government or the PTFOA. Shame on the other branch of the government (the judiciary) for not blocking the 363 for so many reasons, including this one. It's not normal for this to occur, and opens up a can of worms. If not this liability, then why not the rest of the liabilities? You can't blame everything on the gummint. Andrew
Andrew said "You can’t blame everything on the gummint." Why not? They think they are in total charge of everything, and soon even want to tell doctors where they can live and for that matter, who can live (or die like dogs - it's called euthanasia). Not to mention who can have children and when (or else, abortion time). So why can't I blame them? They're ostensibly in total control - they think. They're ultimately responsible - since they want to be responsible for everyone else's decisions. Therefore, when blame is assigned, they should get their fair share. They sure want to claim glory if/when things go right.