REPORT: GM lobbying Congress for $7B in tax relief

Mook

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Ask for a little help from the government, and the next thing you know you're asking for the government to protect you from the very help it's giving you. General Motors is restructuring its debt load by offering equity shares instead of cash to debt holders, namely the government and the UAW. The UAW transaction concerns the VEBA health care fund in that GM wants to pay its obligation to the fund with shares.

The issue is that this transaction is a debt-asset swap and comes with a distressed asset tax (DAT) of $7 billion. The DAT was codified in 1986 to prevent companies from buying money-losing companies just to avoid paying taxes. In GM's case, the debt-asset swap counts as corporate income, but GM can claim it's 2008 losses against that income, greatly reducing its tax bill.

If the tax isn't waived, GM will need to immediately return $7 billion of the money it was just given. It is talking to the Treasury Department, but so far it's been no dice. GM has been lobbying to have a waiver provision put in the economic stimulus bill currently being wrangled over in the Senate, yet there's also been no movement there, either. It's almost inconceivable that the government will demand GM pay the tax. It's equally hard to believe that this is even taking place.
 
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Mook

Mook

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thats todays news champ
 

bluzohh6

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im going to have to find the post from a couple of weeks ago that states the same thing
 
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Mook

Mook

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ull find nothing
 

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