The WSJ reports:
AT&T Inc. said it would take a $1 billion charge against earnings tied to the federal health-care overhaul, joining a number of other companies in reporting an impact from the bill signed into law this week.
The charges relate to prescription-drug benefits for retirees. Companies that provide this benefit, as AT&T does, receive a federal subsidy, plus they can deduct the value of this subsidy from their taxes. The health overhaul cancels the deductibility of the subsidy.
But don’t worry – the government will provide for you.
2 responses
Makes for a great headline. But why are they taking the charge now, when the change doesn't go into effect until 2013? And why so much? Other bigger companies offering the same benefit are only tagging about a tenth that much.
This tax loophole — I mean government benefit to companies (the double write-off) has only been in place since 2003. Now, we go back to a place where the end recipient can still write it off, but the company can't write it off, too.
They're taking the charge because SEC & accounting regulations require them to do so. There's not really a way around that.