GM legally avoided paying U.S. federal income taxes since exiting bankruptcy

Article by Christian A., on May 8, 2012

Even as General Motors Co.’s worldwide tax rate will rise by up to 13%, it still doesn’t have to pay U.S. federal income taxes. It was exempted ever since it exited bankruptcy. Since 2009, GM has had earnings of over $13 billion. For the first quarter of the year, GM has earned $1 billion in profits. It’s likely that GM won’t pay any income for more years to come.

To offset profits, Treasury Department ordered that GM will use $18 billion in losses. According to GM spokesman Jim Cain, the company pays "significant" state taxes but due to its major losses, it isn’t required to pay federal tax liability. He confirmed that no federal income tax was paid in 2011.

In recent years, Ford Motor Co. has paid really low worldwide income taxes in recent years in the past few years after it lost $30 billion between 2006 and 2008. It has also not been able to use past losses to offset its profits. In 2011, Ford paid a total of $268 million in worldwide income taxes, a significant jump from $73 million. It also posted an income of $7.8 billion, with the exclusion amounting to $12.4 billion in deferred tax assets.

Ford spokesman Todd Nissen said that he doesn't indicate how much is being paid to individual countries, or whether it has paid any U.S. federal income taxes in the past few years.

In addition, Chrysler Group LLC (which is majority-owned by Fiat SpA) doesn’t pay any federal income taxes. This isn’t a taxable entity for U.S. federal income purposes. The owners of Chrysler would need to pay any type of U.S. income taxes but Chrysler doesn’t pay pay state and foreign taxes. Throughout the world, the Fiat SpA Group paid $700 million in taxes, such as $92 million for Chrysler operations, according to its 2011 annual report. [source: DetroitNews]

Topics: gm, bankruptcy

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