Study Group: Corporate Income Tax Specialists (US)

GLG News^SM Analyses by this Study Group's Leading Experts(?)

Obama Expected to Sign Generous NOL Carryback Bill on Friday

November 5, 2009

Analysis by:Thomas Klein, Managing Member,

Analysis of:Congress Passes Unemployment Bill With Tax Items | www.journalofaccountancy.com

On Thursday, Congress sent a bill to the White House containing enhanced net operating loss (NOL) carryback opportunities for most companies. The bill contains a provision extending the NOL carryback period from two years to five years for losses incurred in 2008 or 2009. President Obama is expected to sign the bill on Friday which would result in the immediate filing for refunds by many companies.

Obama Administration Moves Foreign Earnings Tax Deferral Reform to Back Burner

October 13, 2009

Analysis by:Thomas Klein, Managing Member,

Analysis of:Business Fends Off Tax Hit | online.wsj.com

Once again, a proposal to reform how a U.S. based multinational company's foreign earnings are taxed has failed to gain congressional support. Similar proposals introduced over the past twenty years have consistently failed to gain traction. The current proposal was part of the Obama administration's fiscal year 2010 budget which made reference to additional tax revenues in excess of $200 billion related to the reform of corporate taxation on foreign earnings.

Security Writedowns Today May Lead to Massive P&L Charges Later for C, MER and Others

April 21, 2008

Analysis by:Thomas Klein, Managing Member,

Analysis of:A Way Charges Stay Off Bottom Line | online.wsj.com

Depending upon management's classification of a security (i.e., either "trading" or "available for sale"), a charge may or may not appear on the income statement in the same period as the write-down on the balance sheet. If the security is classified as a trading security, the charge on the income statement will occur in the same period as the write-down. However, if the security is classified as available for sale, the charge bypasses the income statement and is taken directly to stockholders equity. If the value of the security does not recover prior to its liquidation, the charge typically is taken in the year of liquidation. The potential charge for write-downs related to available for sale securities can be quantified by looking at the statement of stockholders equity, particularly other comprehensive income.

Investors Punish GM Stock, in Part on Large Deferred Tax Adjustment.

November 7, 2007

Analysis by:Thomas Klein, Managing Member,

Analysis of:GM Posts Huge Loss | online.wsj.com

Investors fled General Motors following the release of its Q3 results.  The reported loss for the quarter was $38.96 billion of which 99% of the loss ($38.6 billion) resulted from the write-down of deferred tax assets.  Have investors overreacted to the noncash charge or is the decline in market value justified?

Despite Protests, FASB Will Not Defer Effective Date of New Tax Accounting

January 17, 2007

Analysis by:Thomas Klein, Managing Member,

Analysis of:FASB to Implement Tax Changes Without Delay | www.msnbc.msn.com

The FASB received over 400 letters representing more than 1,000 companies’ concerns about implementation issues related to FASB Interpretation #48 (FIN 48).  The vast majority of the letters requested a deferral of the effective date of the new Interpretation; fiscal years beginning after December 15, 2006 (i.e., the quarter ending December 31, 2007 for calendar year companies).  The FASB voted overwhelmingly not to defer the effective date.  This means that most companies' financial statement will be affected beginning Q1 of 2007.

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