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Technology Stocks : VISIO Corp (VSIO): Big ISO 9000 Play -- Ignore unavailable to you. Want to Upgrade?

To: Grommit who wrote (251)	11/2/1998 9:36:00 PM
From: Dan Spillane	Respond to of 522

I'm glad you are now arguing with the 10K rather than me...I also discussed this with someone in the company. The reason for the lower tax rate is clearly stated in the 10K as being due to foreign operations: "primarily due to ... income taxed in other jurisdictions at rates lower than the U.S. rate"; perhaps there are specific tax laws that depend on which foreign jurisdiction(s) you are talking about. In any case, why argue about this? And you are not entirely following me on the NOLs. Since Visio is cash and stock rich, they may make acquisitions from time to time which benefit them from both the technology and the tax perspective. Yes, NOLs do run out...but if you continue to make smart acquisitions, you may get more and more NOLs. And my understanding is the majority of the tax benefit to Visio is due to income taxed in non-US jurisdictions rather than NOLs.

To: Grommit who wrote (251)	11/3/1998 2:57:00 AM
From: Harry Franks	Read Replies (2) \| Respond to of 522

<<My understanding from one grad business school tax class is that US tax law is such that US corporations get a tax credit for foreign taxes paid. So if a foreign nation charges a lower tax rate, then they pay higher US taxes. >> What you are referring to is "subpart F" in tax terms. It means that certain types of foreign income (generally passive income) is taxed currently at the US rates (with a tax credit). But, take Dell for instance, when it opens a factory in Ireland (12% tax rate or thereabouts), that income does not fall into this "subpart F" exception and the income earned in Ireland is not currently taxed at the higher US rates. It will be taxed at the US rate only upon repatriation (i.e. through a dividend). Under US accounting rules, you don't have to "book" the higher US rate if you can convince your auditors that you have no intention of repatriating the income. Most companies will keep this low taxed income off-shore to finance further international expansion. Assuming continued growth this is the correct answer. Sorry this is technical. Regards, Harry