Times' story on GE paying no taxes is wrong

Allan Sloan of Fortune magazine and Jeff Gerth of ProPublica write Monday that the New York Times story last month stating that General Electric Co. paid no taxes in 2010 is wrong.

Sloan and Gerth say they had been working on a similar story and came to a different conclusion.

They write, “GE’s 2010 financial statements reported a $3.25 billion U.S. ‘current tax benefit,’ which is where the Times, which declined comment, got its $3.2 billion ‘tax benefit’ number. But a company’s ‘current tax’ number has nothing to do with what it actually pays in taxes for a given year. ‘Current tax benefit’ and ‘current tax expense’ are so-called financial reporting numbers, used to calculate the profits a company reports to shareholders.

“They have nothing to do with what a company sends to (or receives from) the IRS. ‘Any correlation between the ‘current tax expense’ and the current tax payable is likely coincidental,’ says a leading tax authority, Ed Outslay, Deloitte/Michael Licata professor of accounting at Michigan State University’s business school.

“After repeated conversations with GE — remember, we’ve been working on this story too — we can finally give you reasonably definitive answers.

“The company says that it’s not getting any refund for 2010 — validating Outslay’s analysis. Its 2010 tax situation? ‘We expect to have a small U.S. income tax liability for 2010,’ GE chief spokesman Gary Sheffer told us. How big is small? GE declined to say. The number is unlikely to ever be disclosed unless GE goes public with it, or is forced to do so.”

Read more here.