GM Could Get $45 Billion Tax Break, Thanks to Bailout
The credit is a final benefit from the company's multibillion-dollar government bailout. Under the terms of the bailout, GM will be able to apply a tax credit related to previous losses and business expenses to future earnings.
This is unusual because GM has changed ownership, The Wall Street Journal said. Normally, when a company restructures, the government imposes limits on this form of tax benefit.
"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 New York tax consultant, told The Journal.
The $45.4 billion in future tax savings is made up of $18.9 billion in carry-forwards based on past losses and savings related to costs such as pensions and property.
The losses were incurred by "Old GM", the company that remained in bankruptcy. "New GM" emerged from bankruptcy in June.