Jeff,
re: < Tax Rates - Hey I think I can contribute something here! >
Jeff, I raised the question regarding the tax rates question. Thanks for your post.
The maximum Federal rate is 35% The maximum Federal rate is 35% but you can't forget about state taxes, international taxes, and the fact that goodwill associated with stock acquisitions is not deductible. An individual investor generally can't predict tax rates, it is probably easiest to just use 38 to 40% unless something big like the tax valuation reserve that AMD had exists.
My tax question was with regards to Intel. Thanks for confirming the corporate tax rate can be as high as 40%, because my model yielded that Intel has been paying a steady ~39.5% (including federal & state) tax on its operational income (excluding capital gains, goodwill, etc,.)
Regarding your point that goodwill associated with stock acquisitions is not deductible - this is what exactly I have been trying to figure out with Intel's ever increasing goodwill amortization each quarter since Q4'99. After doing some research, I realized that Intel started deducting godwill & in-process costs for tax purposes since Q4'99.
Here are two excerpts from Intel's Q1'00 earnings report that raised doubts in my mind that Intel started claiming tax deduction on its goodwill & in-porcess research costs:
intel.com
a) During the quarter Intel announced that the Internal Revenue
Service had closed its examination of the company's tax
returns up to and including 1998. As part of this closure,
the company reversed previously accrued taxes reducing the
quarter's tax provision by $600 million, or approximately
$0.17 per share.
b) ** The tax rate for 2000 is expected to be approximately 31.7
percent, excluding the impact of the recently announced
agreement with the Internal Revenue Service and
acquisition-related costs from both prior and future mergers
or acquisitions.
I believe, Intel is allowed to deduct goodwill & in-process research expenses for tax purposes, because all most all of Intel's acquisitions were cash based.
Goutama |
