IBM Saves 1.6 Billion In Now Closed Tax Loop Hole

According to CNN.com, IBM saved approximately $1.6 billion in the month of May 2007 by using a corporate tax loophole that has since been closed by the IRS. IBM participated in a $12.5 billion stock repurchase that took advantage of funds earned overseas that were not subject to U.S. taxes. IBM was able to save $1.6 billion in the transaction. Although the IRS would not comment on IBM’s recent activity, two days after IBM’s repurchase the IRS announced plans to issue regulations making companies pay U.S. taxes when they buy back their stock. The new regulations would treat funds used for buybacks as repatriated earnings.