Apple has been doing significant stock buy-backs.
My question is: Can Apple use its off-shore cash to do Apple stock buy-backs tax free?
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To the best of my knowledge - and I'm not an accountant, so I may very well be wrong: buybacks are not profits, but are instead considered as an 'investment' in Apple in its own company. Since they are not profits, they are not taxed.
Apple using its offshore cash to buy back its own stock is changing the accounting balance rather than actually generating any profits.
Consider the following balance sheet:
Assets Cash 100M Liabilities Loans 70M Equity C. Stock 22M R. Earnings 8M
In this balance sheet, the retained earnings (what is taxed) is 8M.
With a buyback of 12M in common stock:
Assets Cash 88M Liabilities Loans 70M Equity C. Stock 10M R. Earnings 8M
Retained earnings have not changed, the company's taxable income has not changed, and thus the company should not have to pay any taxes. This should be true regardless of where the money 'physically' is - in the U.S. or elsewhere.