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InvisibleBlack -> RE: The Corp tax rate is to HIGH...get real (4/2/2010 12:41:54 PM)
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quote:
ORIGINAL: LadyEllen
This is getting confusing - income tax expenses? is this the same as corporation tax (ie tax on profit) or "deducted at source" income taxes for their workers' salaries?
E
It's corporate tax (tax on profit). For book-keeping purposes "Income Tax Expenses" is the amount of tax owed for a calendar year, in this case 2009. However, that calender year doesn't necessarily match up with either the "tax year" (which starts on April 15) nor does it have to match of up with Boeing's "fiscal year" which may or may not line up with either the calendar year or the "tax year".
Income tax expenses are comprised of "current tax" and "deferred tax". Current Tax is pretty straightforward, it's revenue that was booked during the calendar year for which income tax is owed in that calendar year. Deferred tax is a bit trickier. It's income that was booked for accounting purposes during the calendar year but for which taxes are not owed during that calendar year. This is because the GAAP (Generally Accepted Accounting Principles) used do not match the IRS' reporting requirements and so revenues & expenses may not fall into the same time periods under both systems.
So for the revenue booked in 2009, Boeing owes 396 million dollars in taxes - none of which is due in the current year according to IRS regulations.
However, this does not mean that Boeing paid no taxes this year nor that they got a refund from the IRS or anything like that. This is because there were deferred taxes from calendar year 2008 (or potentially earlier) that would have to be paid in calendar year 2009. (The only year I'm aware the Boeing actually paid negative taxes was 2003 when they reached a major settlement with the IRS and were awarded billions in tax refunds for over-paying taxes in the late 90s.)
To quote Boeing:
quote:
Income Taxes
Provisions for federal, state, and non-U.S. income taxes are calculated on reported Earnings before
income taxes based on current tax law and also include, in the current period, the cumulative effect of
any changes in tax rates from those used previously in determining deferred tax assets and liabilities.
Such provisions differ from the amounts currently receivable or payable because certain items of
income and expense are recognized in different time periods for financial reporting purposes than for
income tax purposes. Significant judgment is required in determining income tax provisions and
evaluating tax positions.
and
quote:
Income Taxes We have recorded a net liability of $1,787 million at December 31, 2009 for uncertain
tax positions. For further discussion of these contingencies, see Note 5.
If you want to determine what Boeing actually paid in taxes in 2009 based on all income that was taxable in 2009, you need to look for "Income Taxes Payable". According to Boeing:
quote:
Income Tax Obligations As of December 31, 2009, our total liability for income taxes payable,
including uncertain tax positions, was $1,009 million, of which $182 million we expect to pay in the next
twelve months. We are not able to reasonably estimate the timing of future cash flows related to the
remaining $827 million. Our income tax obligations are excluded from the table above. See Note 5.
So for calendar 2009, Boeing actually paid (or will pay in 2010 when it's due) 182 million dollars in taxes.
Looking at Note 5 - which is the auditors (Deloitte & Touche) statement on Income Tax, we find a line item on page 51 (the Consolidated Statements of Financial Position):
quote:
Income taxes payable 182
which matches what Boeing said earlier.
Corporate tax law is an amazingly tricky area and accurately determining what any company owes, paid or did not pay is nigh unto impossible with any precision. As you can see, Boeing themselves aren't sure of how much they currently owe, how much of the taxes they previously paid are correct, nor what their actual tax burden will be in the future - so they've set aside about 1.8 billion dollars to cover contingencies.
For what it's worth, Boeing isn't able to take advantage of the biggest loopholes in the tax codes because, as a defense contractor, they are unable to locate a majority of their operations overseas - it's illegal. They have to keep their operations on U. S. soil. So they cannot shift expenses to countries where the tax rates are lower (or non-existant) nor can they re-incorporate in some other country.
The companies that take the greatest advantage of off-shoring revenue are the big banks, since it's easy for them to move things around quickly and they have operations in every country in the world. None of them need to currently, however, since their operating losses for 2008 are so huge they'll be able to write them off against profits for the next decade.
Boeing's 2009 Annual Report is here: http://www.envisionreports.com/ba/2010/27525ja10e/document_0/Boeing_AR_3-9-10_Preflighted.pdf
(As an aside - I hope that was intelligible. I'm not sure how clearly I'm portraying this stuff. I'm not an expert in corporate tax law - I'm just someone who works with financial statements on a semi-regular basis.)
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