Dell’s Overseas Cash May Be Key in LBO

Repatriating company’s $14 bln of cash, investments outside U.S. could mean tax bill.

Michael Dell’s plan to take his computer company Dell Inc. private may hinge in part on whether he’s able to exploit one of the company’s most valuable assets: as much as $14.2 billion of cash and bonds outside the U.S.

Like many of the world’s largest technology companies, Dell has legally avoided billions of dollars in income taxes by attributing profits to overseas subsidiaries in tax havens. Bringing the cash back to the U.S. to finance the buyout would risk subjecting the money to the 35 percent corporate income tax rate, with a credit for any foreign income tax they’ve already paid.

‘Killer B’

Over the years, U.S. companies have employed a variety of tax-planning techniques for bringing that cash back to the U.S. while still avoiding the income-tax hit. The strategies have spawned colorful nicknames, inspired by the relevant sections of the tax code, like the “Killer B” and the “Deadly D.”

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