Boeings Tax Assets Could Trump Liabilities

SEPTEMBER 1, 2011, 4:11 PM ET

Boeing’s Tax Assets Could Trump Liabilities for Years

Boeing, caught up in defending its CEO’s compensation from a dubious study looking at executive pay through the spectrum of corporate taxes (Felix Salmon did us the favor of dissecting the report yesterday), pointed out to the New York Times that it owes $1 billion in deferred taxes related to its 2010 operations. But the defense underscores the shortsightedness of the accusation. Looking at tax assets and liabilities in a one-year bubble just doesn’t make sense for a company like Boeing, which spends years building its products before recouping the costs through sales. In total, the company has tax liabilities of roughly $10.7 billion. That’s compared to $14.4 billion in deferred tax benefits, which means it ultimately won’t pay anything to the IRS unless the value of those assets erode. And those assets look pretty solid. Some $7.8 billion relate to employee benefits, which never expire. And of those that do, the largest, some $300 million in net operating losses, and credit and capital loss carryforwards, are good for up to 20 years. Chaz Bickers, the Boeing spokesman quoted by the Times, told CFO Journal on Thursday that he cited the deferred liability for 2010 because the authors of the study focused only on compensation and taxes for 2010. “This is a long-cycle manufacturing business,” he said, noting that the company may pay higher taxes in future years as a result. “We make

investments early on, and it does reduce our liability. But going forward, as we begin to deliver those planes, that will change.” Bickers acknowledged that the company’s deferred tax assets may more than offset those future liabilities, but he noted that its tax assets net of liabilities fell from $4 billion in 2009 to $3.5 billion last year.