THE TCJA AND BANK OF AMERICA (BAC): HOW CAN SOMETHING SO GOOD HURT SO BAD?
Keywords:
finance, BankingAbstract
On December 22, 2017, the Tax Cuts and Jobs Act (TCJA) became Law. The Law created good news for most corporations; their income tax rate became a flat 21%. As a result, corporations were expected to save $130.5 billion in 2020 (Auerbach, 2018). Bank of America (BAC), immediately recorded an extremely large expense when the TCJA was passed, in 2017, – even though the Act did not go into effect until 2018. For BAC, this expense was $2.9 billion. How could BAC’s CFO, Paul Donofrio, explain to the CEO, the Board of Directors, investors, creditors, employees – indeed, explain to all stakeholders – that such a marvelous tax break resulted in such a large additional cost?
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