Eaton Expects About $100 Million Expense From New Tax Law
Component supplier Eaton Corp. reported it expects a one-time tax expense of between $90 million and $110 million as a result of the new Tax Cuts and Jobs Act.
About half of this fourth-quarter expense is related to remeasuring U.S. deferred tax balances and the other half is related to taxation of unremitted earnings of non-U.S. subsidiaries owned directly or indirectly by U.S. subsidiaries of Eaton, according to the Dublin-based company.
The taxation of unremitted earnings will be paid over eight years, as required by the act.
The estimate is preliminary, as the exact expense in the fourth quarter can only be determined once fourth-quarter activities have been concluded.
For 2018, Eaton anticipates that its effective tax rate, factoring in the impact of the tax law, will be between 14% and 16%, which represents an increase of 3 percentage points over its prior estimate of 11% to 13% before the impact of the law.
Eaton will announce fourth-quarter 2017 earnings on Feb. 1.
Eaton supplies clutches, transmissions, hoses, fittings, lubricants and diagnostic tolls for commercial vehicles.
