Apple’s creative IRS strategy may appeal to Nevada businesses
Apple Inc. is making headlines over how they apparently hide some of the company’s profits using a tax maneuver common to many corporations. While the majority of Nevada business owners may not bring in the massive profits Apple has, they may still eventually end up with tax obligations to the IRS. Analysts expect apple to report a $9.8 billion net income; however, the number they report likely will not reflect the company’s true profit because of how they handle their money.
The company has apparently stashed away billions of dollars as a way to pay any IRS bills they accumulate. However, many tax experts claim that Apple could boost the last three year’s profits a staggering $10.5 billion by wiping out their “phantom tax obligations.” However, doing so could tarnish Apple’s reputation as a company that tends to be a responsible tax payer.
Right now, the company is able to avoid massive tax debt by taking advantage of an accounting strategy that moves their profits around to areas that have lower tax rates. Often this sends money through other country’s subsidiaries where it eventually winds up in the Caribbean. Apple leaves profits gained overseas inside of overseas bank accounts, and those accounts are estimated to hold a whopping $74 billion. The company is likely keeping the money outside of this country in hopes that the United States will lower future tax rates.
Apple is unique because it sets aside money to pay potential IRS tax debt. However, they still take advantage of creative accounting strategies while also being responsible enough to make good on any debt they may have in the future. Such a strategy may be of interest to Nevada business owners who gain large profits and are trying to minimize their potential tax debt.
Source: “Apple’s phantom taxes hide billions in profit,” Peter Svensson, July 23, 2012