Morgan Stanley said today that it would take a $1.25 billion hit in its fourth-quarter earnings due to a cut in corporate tax rate as part of the U.S. tax code overhaul.
A news report by Reuters quoted the company as saying in a filing that a net blow of the bill to the bank would include about a $1.4 billion net discrete tax provision, mainly due to the re-measurement of certain net deferred tax assets using the lowered corporate tax rate.
It would be offset by $160 million in other positive effects, Morgan Stanley added.
The sweeping tax code changes enacted in late December cuts the corporate tax rate to 21 percent from 35 percent and were expected to mean short-term pain, but long-term gain for U.S.-based corporations.
Scores of large companies, including big banks such as Citigroup and JPMorgan Chase & Co, have socked away an estimated $2.8 trillion overseas in recent years.
The one-time tax on those earnings is expected to raise $339 billion in federal revenues over the coming decade, according to the Joint Committee on Taxation, a nonpartisan research arm of the U.S. Congress.
Morgan Stanley’s arch rival, Goldman Sachs Group Inc had said in a filing on December 29 it expected its fourth-quarter earnings to decrease by about $5 billion due to repatriation tax, the cost of moving money from foreign countries to the U.S.
