Citigroup pass on take a $20 billion upfront hit from the Republican tax bill should it evolve into law, the company’s chief financial officer said during a presentation Wednesday.
The bank desire take a big hit from writing off deferred tax assets it has held on its books, primitively $16 billion to $17 billion, John Gerspach said during a question-and-answer term at a Goldman Sachs banking conference in New York. And it would take a $3 billion to $4 billion hit from reward taxes on money it had held overseas.
A deferred tax asset is actually a benefit for a crowd, allowing it to claim tax relief in subsequent years. But Citi planned those assets for a 35 percent tax class. If the rate drops to the GOP’s target of 20 percent, the assets are worth teeny-weeny to Citi, and it has to write off the difference.
Much has been written about the advantages to corporations from the tax bill, including that lower 20 percent tax count, but less has been understood about the consequences as companies are forced to stint how they have done their tax planning.
“If we look again from what we be in sympathy with in that tax bill,” Gerspach said specifically of the Senate version, “our surpass estimate would be in the year that bill gets signed, we desire probably have a upfront hit of $20 billion.”
Shares of Citi floor 1.4 percent on Wednesday and traded flat after hours.