Goldman Taking One-Time $5 Billion Hit

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On Friday, Goldman Sachs Group Inc announced it expects fourth-quarter earnings to be around $5 billion less than previously predicted, as the bank seeks to take advantage of new tax law which makes it less expensive for U.S. companies to send home profits.  The majority of the $5 billion would be due to the repatriation tax, the price of moving money from foreign countries to the U.S., said Goldman in a statement with the Securities and Exchange Commission.

Last week, President Donald Trump signed Congress’ U.S. tax overhaul bill into law, which significantly decreases the corporate tax rate to 21 percent from the previous 35 percent.  According to the new tax law, profits that are brought back to the United States will no longer be taxed at the usual 35-percent corporate tax rate. In its place, those foreign profits will only be taxed at 15.5 percent for cash assets and 8 percent for non-liquid assets.

Apple Inc is likely to benefit greatly from the new bill since it allows the tech giant to bring home a mountain of $252.3 billion in foreign profits without a major tax blow.

Amgen Inc recently stated that it anticipates suffering tax expenses of $6 to $6.5 billion, as it sends back its foreign profits.

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Many other companies have also advised the possibility of a one-time loss due to the tax plan, for instance Delta Airlines stated that it might take a $200 million hit due to tax expenses.


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Large European banks such as Barclays, UBS Group and Credit Suisse Group stated that the new tax bill will cost each company between $1.3 billion to $3 billion.  JPMorgan Chase & Co, Wells Fargo and Morgan Stanley have not responded to requests for comments.

In a public filing, Bank of America stated that it expects net income for the quarter ended Dec. 31, 2017 to shrink by around $3 billion, primarily because of the lower valuation of deferred tax assets.

Shares of Goldman Sachs were slightly down in early trading.

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