• Nov 5, 2010
They say that only certain things in life are death and taxes. General Motors already escaped one of the two, and now it's getting a big break on the other – as part of GM's restructuring plan, it's eligible for up to $45 billion in tax breaks. Under the Troubled Asset Relief Program (TARP), General Motors can utilizes its pre-bankruptcy losses to offset future tax liabilities. This should provide a large dose of financial help for the automaker, as it goes forward with its IPO and works to pay back the US and Canadian tax-paying public.

[Source: Automotive News – sub. req. | Image: Paul Sancya/AP Photo]


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  • 57 Comments
      • 4 Years Ago
      This is exactly why every time i buy something for $30+ i buy it online from small websites so i do not have to pay the sales tax. These taxes that i and all others pay end up as special projects or this.
        • 4 Years Ago
        Well if Verizon didn't charge $35 for a charger and $10 for one screen protector I wouldn't use my ebay so much... =P
        • 4 Years Ago
        lol, what? Sales taxes aren't a Federal thing.
        • 4 Years Ago
        The bailouts were a federal program. When you avoid paying sales tax you're actually taking money away from states, counties and cities thereby making them more reliable on the federal government.
      • 4 Years Ago
      Sigh.
      • 4 Years Ago
      It's very common for companies coming out of bankruptcy to be able to use operating loss carryforwards for tax breaks after bankruptcy. The only exception made here for the TARP program is that a company typically loses this option if majority ownership changes hands, as it did with GM.

      Otherwise this is business as usual and presents a turn around investing opportunity. Peter Lynch made a fortune off of deals like this one.
      • 4 Years Ago
      They should extend these tax breaks to Ford and Chrysler. If it's good for GM, it would be good for them as well.

      We wouldn't want to play favorites now would we?
        • 4 Years Ago
        @Black and Blue
        It's not associated with bankruptcy, even before it went bankrupt GM would have qualified for these same tax breaks-except you can't use tax breaks if you're not making any money. Ford actually has $19 billion of operating losses that they can use in the exact same way, so they can make $19 billion without paying any taxes.
        The only thing that's giving GM an edge is that their bankruptcy let them dump all the bad debt while keeping their tax breaks. But this is a standard tax break anybody gets-even regular people can use this tax break if they lose money investing.
        • 4 Years Ago
        Every company can use operating losses as a tax deduction against future earnings.
        • 4 Years Ago
        Strange. I wasn't aware that "new GM" had such substantial operating losses. After all, they can't claim operating losses on "old GM" as it is no longer in business or associated with "new GM" in any way, shape or form. Are you trying to state that they get both the benefit of writing off all of their debt obligations while also claiming the operating loss?
        • 4 Years Ago
        "Are you trying to state that they get both the benefit of writing off all of their debt obligations while also claiming the operating loss"

        No. "Old GM" is basically a holding company with cash for environmental cleanup and some other items and will cease to exist in the near future. Old GM would have no use for tax deductions because there will never be another profitable year for that entity.

        It makes you wonder why people continue to trade the stock.
      • 4 Years Ago
      Are you kidding me? They tax incentives and still owe taxpayers and still build bad cars. WTF is wrong with this picture?
      • 4 Years Ago
      I bet Ford wishes they got $40 billion worth of tax discounts...
        • 4 Years Ago
        It's sad that the successful company gets nothing, and the failure of gm gets billions of free money, then more billions of tax breaks.
        • 4 Years Ago
        Do you realize that Ford is using previous losses for tax cuts. I think they have $17 Billion tax credit.
        • 4 Years Ago
        It's sad that the successful company gets nothing, and the failure of gm gets billions of free money, then more billions of tax breaks.
      • 4 Years Ago
      I see Ford in my future.
        • 4 Years Ago
        Me too. I can use the money I've made off of the Ford stock I bought to buy a new Ford. I bought in at under $4/share and it just broke $16/share today. Now THAT is return on investment.
      • 4 Years Ago
      Now I am not a corporate tax expert, but doesn't the loss belong to old GM (Liquidation Motors) and not the current GM? I thought the new GM re-emerged without any of the dead weight and loss?
      • 4 Years Ago
      Why aren't as many people this outraged about the 550+ billion a year spent subsidising oil companies?

      http://www.bloomberg.com/news/2010-07-29/fossil-fuel-subsidies-are-12-times-support-for-renewables-study-shows.html
      • 4 Years Ago
      How can they write off the "loses", since all the loses happen at "bad GM". The company that got liquidated?
      • 4 Years Ago
      Being an employee of the company my opinion is probably bias, but... With 47 extra billion for business this is what I am expecting. The company will be able to take more risk in developing new chassis and powertrains knowing that a 2 billion dollar failed research venture isn't going to bankrupt the company. Fuel cells, Li-ion battery packs, OPOC engines, and advanced polymers in the beginning look like an academic research plan to an accountant not a sound business venture.
      We can come up with some pretty cool stuff when not strangled by debt!
      Look at this as an investment into the future of what is going to be available to the market of automobile safety, efficiency, and just driving enjoyment in general.
      • 4 Years Ago
      Transplants are not a 1 for 1 replacements of domestic automaker domestic presence. Not ever close on multiple levels.

      As for investing in foreign companies, that's the rub right? Why not bet against US companies when you know foreign companies are aided by their governments and can interfere with US government aid to US companies. It makes for failure of domestic companies inevitable and return on your investment a sure thing. Its claimed the electronics industry, the textile industry, small appliance industry.

      Other countries either currency fix (Japan & China) or have near Slave Labor wages and conditions (China). We do nothing, usually. Its a winning formula, isn't it?

      I would gamble wallsteet is more pissed off by the government interfering with their sure thing than about any dogmatic reasons against helping companies and free markets.
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