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Technology Stocks : Apple Inc.
AAPL 270.82-1.0%Dec 22 3:59 PM EST
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To: ggamer who wrote (165348)2/4/2014 3:45:29 PM
From: Art Bechhoefer1 Recommendation

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david1951

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Foreign companies that build manufacturing facilities in the U.S. don't pay taxes on the investment, only on the profits. Usually foreign auto companies manage to locate where they can get a break on state and local income and property taxes. Their profits derived from U.S. operations might be taxable at the federal level, but the tax would become a tax credit off their native country taxes. The foreign tax credit is a reciprocal arrangement where profits taxed overseas are deductible either as a straight deduction or as tax credits. The same is true for foreign companies investing in the U.S. for those countries that have a treaty with the U.S. allowing such arrangements.

Apple has been able to repatriate cash held overseas to pay interest on the bonds it issued when it decided to buy back some of its shares. If the funds were used to pay interest on the bonds, because interest payments are deductible, then the effect is to repatriate funds with no extra taxes needing to be paid. This was a very smart move by Apple, especially when you consider how low the interest rates were on the bond issue.

Art
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