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Strategies & Market Trends : 2026 TeoTwawKi ... 2032 Darkest Interregnum -- Ignore unavailable to you. Want to Upgrade?

To: Haim R. Branisteanu who wrote (81487)	10/16/2011 2:41:41 PM
From: Haim R. Branisteanu	1 Recommendation Read Replies (1) \| Respond to of 218315

IRS Auditing How Google Shifted Profits to Avoid Taxes - (this is what I mean) By Jesse Drucker - Oct 13, 2011 The U.S. Internal Revenue Service is auditing how Google Inc. (GOOG) avoided federal income taxes by shifting profit into offshore subsidiaries, according to a person with knowledge of the matter. The agency is bringing more than typical scrutiny to how the company valued software rights and other intellectual property it licensed abroad, said the person, who requested anonymity because the audit isn’t public. The IRS has requested information from Google about its offshore deals after three acquisitions, including its $1.65 billion purchase of YouTube, the person said. The transfer overseas of these kinds of rights has enabled Google to attribute earnings to foreign units that pay lower taxes, Bloomberg News reported a year ago. While Google’s potential liability isn’t clear, similar deals between companies and offshore arms are often the subject of disputes over hundreds of millions of dollars in taxes, said Daniel Frisch, an economist at Horst Frisch Inc. which advises businesses on transfer pricing -- the allocation of income between units in different countries. In 2006, the IRS settled a case with drugmaker GlaxoSmithKline Plc (GSK) for $3.4 billion. “The very biggest transfer-pricing tax disputes are over transfers of intangibles to offshore subsidiaries,” said Frisch, whose firm is based in Washington. Google reported an effective tax rate of 18.8 percent in the second quarter, less than half the average combined U.S. and state statutory rate of 39.2 percent. bloomberg.com U.S. companies are sitting on at least $1.375 trillion in earnings in their foreign subsidiaries on which they have paid no federal income taxes, according to a May report by JPMorgan Chase & Co. Companies including Google, Cisco Systems Inc. (CSCO), Pfizer Inc. (PFE), Apple Inc. (AAPL) and Microsoft Corp. (MSFT) are lobbying Congress for a tax holiday on bringing home those profits, which would otherwise be subject to U.S. income tax at the 35 percent corporate rate with a credit for foreign taxes already paid. Moving profit abroad is particularly important for cutting the tax bills of technology and pharmaceutical companies because of their valuable and easily transportable collection of patents and copyrights. Google, Cisco, Facebook Inc., Microsoft and Forest Laboratories Inc. (FRX), maker of the blockbuster antidepressant Lexapro, have used tax-cutting strategies that move profits into units -- often with no employees or offices -- in havens such as Bermuda, the Cayman Islands and Switzerland, Bloomberg has reported.

To: Haim R. Branisteanu who wrote (81487)	10/16/2011 9:17:20 PM
From: Cogito Ergo Sum	Read Replies (2) \| Respond to of 218315

I think you are quite on to something there Haim re your followup post.. Profit shifting is a pattern these days... and borrowing cheap money domestically is a corollary.. re: #4 I would turf it altogether... we do not have it up here and do just fine.. in fact it encourages us (and this is born out by stats I've posted before) that we tend to pay our homes off a lot sooner up here and have a lot of mortgage free folks.. vagaries of the housing market are still a concern like in Vancouver but in total less onerous.. BTW my home is sub sub 500K by a bit.. nice middle to upper middle class area.. my home on the lower end of the scale.. never buy the most expensive home in the area :O) re: #1.. it also encourages saving and less frivolous spending good list IMO.. got my vote