Summary
Union Pacific Corporation (UNP) has filed an 8-K report on January 9, 2018, detailing the preliminary impact of the Tax Cuts and Jobs Act (TCJA) enacted in late 2017. The company anticipates a significant non-cash reduction in income tax expense for its 2017 financial results, estimated at approximately $5.8 billion. This reduction is primarily due to the revaluation of deferred tax liabilities to align with the new, lower federal corporate tax rate of 21% promised by the TCJA. In addition to the direct tax expense impact, UNP also expects an approximate $200 million non-cash reduction in operating expenses related to income tax adjustments from its equity-method affiliates. Investors should note that these figures are preliminary estimates based on an initial analysis of the complex TCJA. The company cautions that these estimates may be subject to adjustments as further guidance from the IRS, SEC, or FASB becomes available, or as UNP conducts its full 2017 year-end financial reporting, scheduled for January 25, 2018.
Key Highlights
- 1Union Pacific (UNP) reported the preliminary financial impact of the Tax Cuts and Jobs Act (TCJA).
- 2Anticipates a significant non-cash reduction in 2017 income tax expense of approximately $5.8 billion due to the lower 21% federal corporate tax rate.
- 3Estimates an additional non-cash reduction of roughly $200 million in operating expenses from equity-method affiliates.
- 4These impacts are non-cash charges and will primarily affect the company's 2017 financial results.
- 5The reported figures are preliminary estimates and may be adjusted in future reporting periods.
- 6Further guidance on the TCJA from regulatory bodies could lead to revisions of these estimates.
- 7UNP plans to announce its full 2017 financial results on January 25, 2018.