Thursday, April 4, 2024

We always love to see how financial analysts put Calcbench data to work, so today we wanted to share a fascinating research note from Morgan Stanley that used Calcbench data to model the potential upside to some tax legislation working its way through Congress.

The legislation in question, the Tax Relief for American Families & Workers Act, would revive several expired business tax breaks — and would delay the effective date of previous tax legislation that required companies to amortize R&D tax credits instead of deducting the value of those credits immediately.

If this legislation becomes law (it’s already passed in the House, and awaits action in the Senate), that would let companies revert to the status quo ante: fully deducting the value of those R&D tax credits right away. So for large R&D spenders, Morgan Stanley notes, “These changes could yield sizable tax refunds and higher free cash flow numbers.”

Next question, obviously: Who are these big R&D spenders, and what effect might this legislation have on their free cash flow?

Using data from Calcbench (and elsewhere, to give lesser financial data providers their due), Morgan Stanely modeled the answers to the above questions. The table below shows the results for the 10 largest R&D spenders. 

Morgan Stanley provided a much longer list than shown here, and also provided an in-detail example using financial disclosures from Microsoft ($MSFT). You can download and read the entire research note for yourself if you want to learn more.

Of course, you can always conduct similar research of your own using Calcbench. You might want to start with our Guide to Analyzing Tax Disclosures (complete with a tax disclosure Excel template), or you can dive right into our Multi-Company page (to see data for peer groups) or or Interactive Disclosures page (for footnote-level disclosures about individual companies). 

Just another fun way to use Calcbench while procrastinating on your own personal tax return. Enjoy!

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