Why does a company posting losses (i.e. Vonage) pay taxes?

Sep 01, 2009 1 Replies

Why did Vonage have to pay taxes, when their company had a -64,000,000 in EBIT? Companies shouldn't pay taxes for a loss.


PERIOD ENDING 31-Dec-08 Total Revenue 900,120   Cost of Revenue 305,592  



Gross Profit 594,528  


Research Development -   Selling General and Administrative 552,355   Non Recurring -   Others 48,612  



Total Operating Expenses -  


Operating Income or Loss -6,439


Total Other Income/Expenses Net -27,581 Earnings Before Interest And Taxes -34,020 Interest Expense 29,878   Income Before Tax -63,898 Income Tax Expense 678   Minority Interest -  



Net Income From Continuing Ops -64,576


Discontinued Operations -   Extraordinary Items -   Effect Of Accounting Changes -   Other Items -  


Net Income -64,576 Preferred Stock And Other Adjustments -  



Net Income Applicable To Common Shares ($64,576)



 

"2.7182818284590..." wrote

You would need to dig around and find out what makes up the tax number. It possible that the tax number is not just federal taxes, and as such, it's highly likely that states have not adopted some of the expensing stances (section 179, 50% expensing, etc) of the feds. So there would be cases that there would be state profits and state taxes but no federal income tax. It may be possible that Vonage is profitable in some states, but not in others, giving rise to state tax but no federal.

So one would have to have the drill-down numbers into what makes up the taxes figure to know the whys.

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