TaxProf Blog

Editor: Paul L. Caron, Dean
Pepperdine University School of Law

Wednesday, April 30, 2014

EBay Bucks Trend, Repatriates $9 Billion to U.S. at $3 Billion Tax Cost

Wall Street Journal, EBay to Take $3 Billion Tax Charge Online Marketplace to Bring Overseas Cash Back to U.S.:

EBay (2014)EBay is taking the unusual step of bringing most of its foreign-held cash back to the U.S.—and with it a $3 billion tax bill. ... "We are an acquisitive company and we need to ensure we have the resources available to capitalize on targets that become available," said Bob Swan, the San Jose, Calif., company's chief financial officer. "To be clear, we are not announcing any large U.S.-based acquisition."

EBay said it would bring as much as $9 billion that it had previously designated as permanently invested overseas back to the U.S., meaning it will pay tax on the difference between the U.S. and foreign tax rates. The move appears to be one of the largest repatriations in recent years.

Rather than repatriate foreign earnings and pay the tax, many more companies are borrowing for domestic purposes. Apple on Tuesday said it would sell $12 billion in bonds, just a year after agreeing to a $17 billion bond sale.

"Firms as strong as eBay could go the Apple route and just use foreign cash to service their debt," said Edward Kleinbard, a professor at University of Southern California's Law School and a former chief of staff for Congress's Joint Committee on Taxation. "It's surprising that a company would incur current costs when they could just issue debt."

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It sounds like eBay is getting ready to acquire another company. I can't wait to find out which company that is. Or this article can imply that eBay is low on cash and is desperate to regroup themselves financial. Hopefully it is the brighter of the two possibilities. In the end, it is always good to hear of money coming back INTO the U.S. for a change. :) Thanks for the article!

Posted by: Dale K | May 8, 2014 2:21:24 AM