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This looks like a huge capital loss for HP. But, is it actually a move to lower HP's tax burden ahead of the expiring Bush tax cuts? It seems to me that they
by lupatus 14y ago
This looks like a huge capital loss for HP. But, is it actually a move to lower HP's tax burden ahead of the expiring Bush tax cuts?
It seems to me that they valued it one-way a year ago, based mainly on intangible value. But now, they are valuing it another way, based on actual sales, that gives it a lower value that looks like a capital loss for HP.
In real terms though, what capital has been lost? They still have all the Autonomy resources they paid for a year ago.
- twoodfin 14y agoI was unaware the Bush tax cuts had any effect on corporate tax rates (excluding things like S corporations that pay individual rates).
- lupatus 14y agoYeah. IANA lawyer or tax professional, but it seems to me that capital gains and dividend taxes for C Corporations will be going up if the Bush tax cuts expire: http://www.deanmead.com/deanmead-newsletter/effects-of-tax-rate-changes-after-extension-to-bush-tax-cuts-end-2/ http://www.deanmead.com/deanmead-newsletter/effects-of-tax-r...
- twoodfin 14y agoC Corporations don't pay capital gains and dividend taxes. Their investors do. Unless this announcement has a positive effect on HP's stock, there are no additional gains or dividends to be had ahead of the tax rates going up. For a real example of corporate maneuvers around the 'fiscal cliff', see Wal-Mart, which is moving up its dividend to help its investors avoid a potentially higher rate: http://www.reuters.com/article/2012/11/19/walmart-dividend-idUSL4N08Z3CB20121119 http://www.reuters.com/article/2012/11/19/walmart-dividend-i...