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

Posted by 2.7182818284590... on September 1, 2009, 3:05 pm

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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=A0=A0
Cost of Revenue                        305,592=A0=A0

Gross Profit                        594,528=A0=A0

                Research Development        - =A0
                Selling General and Administrative        552,355=A0=A0
                Non Recurring        - =A0
                Others        48,612=A0=A0

                Total Operating Expenses        - =A0

Operating Income or Loss                        -6,439

                Total Other Income/Expenses Net        -27,581
                Earnings Before Interest And Taxes        -34,020
                Interest Expense        29,878=A0=A0
                Income Before Tax        -63,898
                Income Tax Expense        678=A0=A0
                Minority Interest        - =A0

                Net Income From Continuing Ops        -64,576

                Discontinued Operations        - =A0
                Extraordinary Items        - =A0
                Effect Of Accounting Changes        - =A0
                Other Items        - =A0

Net Income                        -64,576
Preferred Stock And Other Adjustments                        - =A0

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

=A0

Posted by paulthomascpa on September 1, 2009, 3:25 pm

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> 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.

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.

--
Paul Thomas, CPA
www.paulthomascpa.com