In what’s likely to be the largest net loss in its history, GM today will announce earnings that include a $39 billion tax charge costing it nearly $70 per share. The charge rear-ends the automaker after a quarter that saw strong US sales and a positive labor pact with the UAW. GM traded at $35 after hours.
GM’s charge is a non-cash loss based on accounting rules that allow tax overpayments to be used as credits against future income. Credits are lost if a company doesn’t earn enough to use them. While GM’s core business rebounded, and it regained the world sales lead from Toyota, the company's struggling GMAC finance unit and ResCap sub-prime mortgage business have hurt it.