...An obvious set of winners is corporations, whose top tax rate would drop from 35 to 15 percent. But through the magic of accounting, some of these winners would look like losers:
Banks like Citigroup and Bank of America would have to take some sour with the sweet: A lower tax rate would mean they will have to take billions of dollars in charges against earnings to write down the value of their giant piles of “deferred tax assets.”
Next time someone complains that companies that report non-GAAP earnings are using "fantasy numbers," let's all remember that GAAP would require Citigroup and Bank of America to report billions of dollars of losses solely because they will pay lower taxes in the future. Under this tax plan, Citi and BofA would have the same amount of money now, and more money in the future, but under U.S. generally accepted accounting principles they would have to report a huge loss anyway.
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