Verizon sees $4.10 impact to FY17 EPS after tax reform
In a regulatory filing, Verizon said that, due to the complexities involved in accounting for the enactment of the Tax Cuts and Jobs Act, SEC Staff Accounting Bulleting 118 allows the company to provide a provisional estimate of the impacts of the TCJA in its earnings for the fourth quarter and year ending December 31, 2017. Accordingly, based on currently available information, Verizon estimates that the enactment of the TCJA will result in a one-time reduction in net deferred income tax liabilities of approximately $16.8B, due primarily to the re-measurement of U.S. deferred tax liabilities at the lower 21% U.S. federal corporate income tax rate. This impact will be reflected in income from continuing operations which will increase the company's earnings for the fourth quarter and year ending December 31, 2017, but will not have any impact on the 2017 statement of cash flows. For the year ending December 31, 2017, the impact of the TCJA to Verizon's earnings per share is estimated to be approximately $4.10. At present, the company does not estimate any material impacts from either the repatriation tax or the implementation of the territorial tax system. In addition, given its present financial profile, Verizon expects to fully deduct interest expense under the present EBITDA test and in the future under the more restrictive EBIT test to be in effect after 4 years.