Silicon Investor (SI) -- The First Internet Community

STOCKTALK

We've detected that you're using an ad content blocking browser plug-in or feature. Ads provide a critical source of revenue to the continued operation of Silicon Investor. We ask that you disable ad blocking while on Silicon Investor in the best interests of our community. If you are not using an ad blocker but are still receiving this message, make sure your browser's tracking protection is set to the 'standard' level.

Technology Stocks : Advanced Micro Devices - Moderated (AMD) -- Ignore unavailable to you. Want to Upgrade?

To: jeff_boyd___ who wrote (20897)	11/28/2000 6:59:31 PM
From: Petz	Read Replies (2) \| Respond to of 275872

Jeff, thanks for the info. <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%...> But most hi tech companies don't show anywhere near 35% for taxes. Is that because of tax credits and the like or are they just underreporting taxes? (Seems like that would result in a ballooning liability someplace on the balance sheet.) For example, Intel's "net income before taxes" was 3,823, but after adding amortization of goodwill back in, its net before taxes was 4,243. But they only said taxes were 1,314. That's a 31% rate. TIA. Petz

To: jeff_boyd___ who wrote (20897)	11/28/2000 10:05:28 PM
From: Goutam	Read Replies (1) \| Respond to of 275872

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