(P3P) – Morgan Stanley (MS.N) mentioned on Friday it could take a $1.25 billion hit in its fourth-quarter earnings because of a minimize in company tax fee as a part of the U.S. tax code overhaul.
The web blow of the invoice to the financial institution will embrace a few $1.four billion web discrete tax provision, primarily because of the remeasurement of sure web deferred tax property utilizing the lowered company tax fee, the corporate mentioned in a submitting.
It could be offset by $160 million in different constructive results, Morgan Stanley added.
The sweeping tax code adjustments enacted in late December cuts the company tax fee to 21 p.c from 35 p.c and had been anticipated to imply short-term ache, however long-term achieve for U.S.-based firms.
Scores of enormous corporations, together with huge banks resembling Citigroup (C.N) and JPMorgan Chase & Co (JPM.N), have socked away an estimated $2.eight trillion abroad in recent times.
The one-time tax on these earnings is predicted to lift $339 billion in federal revenues over the approaching decade, based on the Joint Committee on Taxation (JCT), a nonpartisan analysis arm of the U.S. Congress.
Morgan Stanley’s arch rival Goldman Sachs Group Inc (GS.N) had mentioned on Dec. 29 it expects its fourth-quarter earnings to lower by about $5 billion because of repatriation tax, the price of shifting cash from international nations to the U.S., Goldman mentioned in a submitting.