Comment by toss1 | Hacker News Reader

Comment by toss1 | Hacker News Reader

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Of course there are distinctions between current operating profits and depreciation. There should be zero issue in making both public, e.g., [current profits=$100], [current year depreciation of past R&D=$15], [Net Profit=$85]. Report them both, pay taxes on $85, and both the govt and the stock market are happy.

The jurisdictional differences are the main thing that is being exploited here, and must be cracked.

Sure, if Acme Widgets makes 50% of their widgets in Germany and sells that whole lot in the EU, then fine. But Apple, Google, Amazon, FB, etc. setting up "R&D Offices" in Ireland, Bermuda or other tax havens and sending $$Billions in "licensing fees" to those entities to effectively hide their profits from US taxes is a flat-out farce, and it is literally stealing from you and me.

It is simple, if you are profiting off of the US economy, society, and infrastructure, you need to be contributing to it.

If you have a better solution to the time and jurisdictional problems, please state it. But it is long past the time when saying "it's complicated" and walking away is anything more than making excuses for those who game the system and steal from us every day.

It’s not depreciation that is the major timing concern (as that already hits both GAAP and taxable profits), but rather prior period net operating loss carry-forwards (which are not a GAAP or typical non-GAAP reduction of current profits, but are a tax credit [and properly/necessarily so in a profit-taxation system])

Fine, those can be handled the same way - transparently.

Report them to both the IRS and to public stock markets.

Yes, it will reduce your publicly reported earnings, as it should. Smart investors & analysts will quickly learn to account for that. In fact they already do with constructs that are bogus from an actg point of view, like EBITDA, but useful from an investing POV.

Indeed, it will be very useful for investors to see that Company X and Company Y both report $100 of earnings, but Co_Y is reporting that number after taking $50 in loss carry-forwards.

Again, paying on the greater of SEC-reported earnings or tax-filing earnings hurts only companies that are trying to scam the system and their investors. It helps everyone else, including you and me.

You want the capital market benefits of reporting big profits? Fine, pay the commensurate taxes. Letting them have it both ways is literally telling the thieves to have a nice day as they walk out the front door with the contents of your family safe in their bags and your electronics on their carts.

Net operating loss carryforwards are reported today. They are not treated as a reduction in current profits (operating or otherwise), because they are water under the bridge from long ago.

Yet, people are up in arms over it.

If company A experiences actual results (and reports) -50 two years ago, 0 last year, and +50 this year in operating profits, in my view, they should owe no taxes on their profits, as they have had none. There's nothing gaming or scamming about that in my view. If your method suggests they should report -50, 0, 0, (or 0, 0, 0) I think that's actually obscuring their true results.

In that specific case, what would you suggest they report for each of those years?

I know NOL carryforwards are reported today, done it myself for a small corp. I don't see anyone up in arms about it. A NOL carryforward is easily understood, and legitimate ones don't last long, especially against scaled massive profits.

They don't begin to explain the decades of major US corps, including the FAANG group, of paying zero-to-trivial US taxes.

It is the long-term sum of all the evasion, even if it is technically legal, that amounts to theft.

Even if it is technically legal, the net result is theft. There are many tax dodges that are -in practice- available only to large corporations simply because the costs of the setup and/or the costs of the army of financial experts and tax attnys is so high that it only works at scale. So FAANGs can take advantage of it, and leave the tax bill to all the small startups.

If you have a better solution, by all means, propose it.

Stop making single-point excuses about the trees when the forest is the problem.

People do seem to be complaining about Amazon's NOLs:

https://www.cnbc.com/2019/04/03/why-amazon-paid-no-federal-i...

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