RayJay, Morgan Stanley and Stifel to Take Q4 Tax-Overhaul Hits
Raymond James Financial on Thursday became the latest company to warn investors that it is likely to take a one-time hit to quarterly profit as it prepares for lower corporate taxes going forward.
The company expects to take about a $120 million hit as a result of writing down the value of tax benefits as a result of the new Tax Cuts and Jobs Act that will cut the corporate rate in 2018 and beyond to a cap of 21% from 35%, it said in an SEC filing.
The Florida-based financial firm also will repatriate overseas cash to take advantage of the new law’s discounted 10% tax on the money. The hits reflect the “remeasurement of U.S. deferred tax assets at the lower enacted corporate tax rate and, to a lesser extent, the repatriation tax,” Raymond James wrote in the 8-K filing.
The disclosure follows moves announced earlier by several other banks and broker-dealer.
Morgan Stanley filed a regulatory notice last week saying that it expects its fourth-quarter earnings to be reduced by about $1.25 billion to reflect tax-related charges.
Stifel Financial Corp. similarly said that its after-tax earnings for the fourth quarter will be sliced by between $105 million and $115 million because of its decision to accelerate certain deferred expenses and related tax-writeoffs into 2017.
The St. Louis- parent of broker-dealer Stifel Nicolaus said it was accelerating the vesting of deferred restricted stock and corporate debt to its top corporate executives into 2017 in order to “maximize tax savings and the value of its net deferred tax asset.”
Neither Morgan Stanley nor Raymond James discussed in their filings whether they planned to accelerate deferred executive compensation.
Raymond James plans to report its fiscal 2018 first-quarter earnings on January 24. Stifel will announce its fourth-quarter results on January 30, and Morgan Stanley has scheduled its fourth-quarter report for January 18.