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Technology Stocks : INPR - Inprise to Borland (BORL)
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To: Jerry Whlan who wrote (4267)2/4/2000 8:57:00 PM
From: i-node   of 5102
 
By taking the write-down in the same fiscal year as the MSFT donation, they severely reduced the amount of taxes they had to pay on the $100M.

Well, it's tough to tell without doing some research. In general, the write down is probably for accounting purposes only, and likely did not give rise to any tax deduction. The rules for taking tax losses are quite stringent, and usually must involve a sale or other disposition of the property in question (not merely a "decommissioning"). Further, the $100M in income from MSFT would presumably be capital gain, which is taxed differently from ordinary income anyway. Finally, I would assume that INPR has NOL (net operating loss) carryforwards from prior years which would offset some income. But really, you have to take into account a lot of stuff like depreciation and amortization methods to know where they are from a tax perspective.

My guess: There were minimal tax benefits from the writedown; more likely, it was just some "window dressing" to get all the red ink out of the way. They knew they were going to have to take a hit, take it now & get it done with. The audited statements will have to detail the "purported" reasons for the writedown, which may provide some insight.
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