The NY Times discussed GM and their newest financial problems in a recent post. GM is asking for more financial relief, in their taxes. A segment of the article can be read below, but the full post can be found here.
General Motors (GM), which is borrowing $13.4 billion from the federal government to remain solvent, is pressing Congress to waive a tax liability of as much as $7 billion related to the overhaul plan that it is completing this month, people with knowledge of the discussions said on Sunday.
The tax bill, which could be enough to force the company into bankruptcy, would be a consequence of the terms that the Treasury Department required as part of the rescue package approved last month by the Bush administration. In accepting the loans, GM pledged to persuade its creditors to swap a large chunk of the automaker’s debt for equity in the company.
The equity-for-debt exchange is aimed at ensuring GM’s viability in the future, but under corporate tax law, the swap would amount to debt forgiveness and count as income for G.M. The resulting tax bill could take GM’s cash level below the minimum needed for daily operations.
GM is lobbying Congress to reduce or eliminate the tax liability, said people with knowledge of the effort, who spoke on the condition of anonymity because the discussions were private. The Detroit News first revealed the lobbying effort on Friday.
