Log in
E-mail
Password
Remember
Forgot password ?
Become a member for free
Sign up
Sign up
New member
Sign up for FREE
New customer
Discover our services
Settings
Settings
Dynamic quotes 
OFFON

MarketScreener Homepage  >  Equities  >  Nyse  >  Duke Energy Corporation    DUK

DUKE ENERGY CORPORATION

(DUK)
  Report
SummaryQuotesChartsNewsRatingsCalendarCompanyFinancialsConsensusRevisions 
SummaryMost relevantAll NewsPress ReleasesOfficial PublicationsSector newsMarketScreener Strategies

Corporations Seek Tax-Credit Cash-out in Next Coronavirus Relief Plan

share with twitter share with LinkedIn share with facebook
07/20/2020 | 06:45am EDT

By Richard Rubin

WASHINGTON -- Many large U.S. corporations are sitting on piles of tax credits they may not be able to use for years. They want Congress to let them have the money now.

Duke Energy Corp., Ford Motor Co., Occidental Petroleum Corp. and others could benefit if Congress includes a tax credit cash-out proposal in its next economic-relief legislation. Such a move, which is among ideas being considered by lawmakers and the Trump administration, could improve corporate cash flow by tens of billions of dollars.

Duke has been unable to use all the corporate-research and renewable-energy credits it accumulated because it has been using accelerated tax deductions for capital investments to lower its taxable income, said Dwight Jacobs, the company's chief accounting officer. That bumped it up against tax-code rules that limit tax credits, leaving $1.8 billion in unused credits on Duke's books. Under the proposal, the company could get that within months instead of years.

The proposal "would give us more cash today and that would cause us to avoid borrowing money that we would otherwise have to borrow," said Mr. Jacobs. He said that Duke isn't counting on the money and that much of the benefits would flow to the regulated utility's customers over time through lower rates.

But the continuing backlash over business tax breaks in March's economic-relief law could make the idea a tough sell as lawmakers wrangle through competing priorities. With expanded unemployment insurance scheduled to lapse July 31, senators are returning to Washington, poised to debate the next government response to the coronavirus pandemic and economic slowdown.

The tax proposal's backers, which include the National Association of Manufacturers, Rep. Jodey Arrington (R., Texas) and a coalition organized by accounting firm PwC LLP, see reasons for optimism. Many credits in question have broad bipartisan support because they subsidize activities Democrats favor, including renewable energy and affordable housing. The net long-run cost to the government of accelerating the credits would be smaller than the immediate cash infusion for companies, because the plan would largely move tax credits from later years up to 2020.

"You don't have to stand up a new program," said David Eiselsberg, senior director of tax policy at the manufacturers' group. "This is something that companies would ultimately be using."

Still, the idea of handing money out to struggling companies with few strings attached is already drawing criticism. Earlier this month, more than 100 congressional Democrats urged legislative leaders to resist new business tax breaks, saying companies had already benefited from tax cuts enacted in 2017 and urging a focus instead on assistance to households.

"Part of why large businesses seek refundability or what they call monetizing their tax credits is because so many corporations have little or no tax liability following the historic deficit-financed giveaways they received under the Trump tax law," wrote the lawmakers, led by Rep. Lloyd Doggett of Texas and Sen. Sherrod Brown of Ohio.

The House's economic-relief bill, passed in May, moved in the opposite direction. It would curtail some of March's tax breaks for money-losing companies. That law accelerated deductions for losses but didn't touch the tax credits at issue now.

"This is not well-targeted relief for businesses that are struggling during the pandemic and recession," Samantha Jacoby, senior tax legal analyst at the progressive Center on Budget and Policy Priorities, said of the tax-credit proposal. "If the desire is to encourage hiring, the incentive could be targeted to that."

Under the tax code, companies can claim credits for activities encouraged by the government. Among the largest are credits for conducting corporate research, funding low-income housing and producing renewable energy. The American Council on Renewable Energy supports making credits temporarily payable to companies -- even if they don't owe income taxes.

Unlike deductions, which lower taxable income, credits reduce a company's tax bill directly. But there are limits. Companies can generally offset only 75% of the taxes they owe by using credits. Any leftover credits can be used for one previous year or up to 20 years in the future.

Those rules mean many companies carry tax credits on their books, then use them when they have enough tax liability. There's no recent comprehensive data, but Internal Revenue Service statistics show that companies brought $81 billion of so-called general business credits into 2016.

The stash of unusable credits varies across companies, depending on their ability to generate tax breaks and deploy them.

Duke, which is part of the PwC coalition, had $1.8 billion in unused credits as of Dec. 31. NextEra Energy Inc., a large producer of renewable energy, had $3.1 billion. Citigroup Inc. had $2.5 billion, though it may be likely to generate enough profits that it can use those credits relatively soon even without the proposal.

Theo Francis contributed to this article.

Write to Richard Rubin at richard.rubin@wsj.com

 


Stocks mentioned in the article
ChangeLast1st jan.
CITIGROUP INC. 0.07% 41.3 Delayed Quote.-47.85%
DUKE ENERGY CORPORATION 0.44% 92.65 Delayed Quote.1.13%
FORD MOTOR COMPANY -1.01% 7.835 Delayed Quote.-15.05%
NEXTERA ENERGY -0.01% 73.965 Delayed Quote.22.25%
OCCIDENTAL PETROLEUM CORPORATION 0.27% 9.16 Delayed Quote.-78.45%
WTI -1.44% 35.705 Delayed Quote.-36.69%
share with twitter share with LinkedIn share with facebook
All news about DUKE ENERGY CORPORATION
10/29DUKE ENERGY : crews restore power, assess damage across Carolinas following fast..
PR
10/29DUKE ENERGY : crews restore power, assess damage across Carolinas following fast..
PU
10/29DUKE ENERGY : crews ready to respond following Hurricane Zeta as remnants of sto..
AQ
10/28DUKE ENERGY : crews ready to respond following Hurricane Zeta as remnants of sto..
PR
10/28DUKE ENERGY : Four businesses honored with 2020 Duke Energy Power Partner Award
AQ
10/26DUKE ENERGY : announces dividend payments to shareholders
AQ
10/23DUKE ENERGY : announces dividend payments to shareholders
PR
10/21NextEra 3Q Profit Tops Expectations
DJ
10/21DUKE ENERGY : unveils sweeping clean energy and emissions reduction plan at inau..
AQ
10/21DUKE ENERGY : awards $260,000 to power community needs in Florida
AQ
More news
Financials (USD)
Sales 2020 25 403 M - -
Net income 2020 3 116 M - -
Net Debt 2020 63 867 M - -
P/E ratio 2020 22,8x
Yield 2020 4,19%
Capitalization 67 836 M 67 836 M -
EV / Sales 2020 5,18x
EV / Sales 2021 5,09x
Nbr of Employees 28 793
Free-Float 94,7%
Chart DUKE ENERGY CORPORATION
Duration : Period :
Duke Energy Corporation Technical Analysis Chart | MarketScreener
Full-screen chart
Technical analysis trends DUKE ENERGY CORPORATION
Short TermMid-TermLong Term
TrendsBullishBullishNeutral
Income Statement Evolution
Consensus
Sell
Buy
Mean consensus OUTPERFORM
Number of Analysts 18
Average target price 94,67 $
Last Close Price 92,24 $
Spread / Highest target 14,9%
Spread / Average Target 2,63%
Spread / Lowest Target -7,85%
EPS Revisions
Managers
NameTitle
Lynn J. Good Chairman, President & Chief Executive Officer
Dhiaa M. Jamil Chief Operating Officer & Executive Vice President
Steven K. Young Chief Financial Officer & Executive Vice President
Bonnie Titone Chief Information Officer
Michael G. Browning Lead Independent Director
Sector and Competitors
1st jan.Capitalization (M$)
DUKE ENERGY CORPORATION1.13%67 836
NEXTERA ENERGY22.25%145 873
ENEL S.P.A.-1.73%83 043
IBERDROLA, S.A.11.33%74 443
DOMINION ENERGY, INC.-2.26%66 972
ORSTED A/S37.01%62 606