Elon Musk's company has continued to be among startups that have been losing money for years. Having accumulated billions in tax losses, SpaceX avoided federal income tax.
UNN reports with reference to The New York Times.
Details
SpaceX benefited from a massive tax relief package signed during Donald Trump's first term in 2017. A key change was the abolition of the 20-year limit on the use of tax loss carryforwards.
Thus, by the end of 2021, the American aerospace manufacturer SpaceX had accumulated almost $5.4 billion in tax losses.
These losses provided a tax benefit known as a net operating loss carryforward. This allows SpaceX to avoid federal income tax on an equivalent amount of future taxable income.
It should be noted that this benefit is available to all companies, including startups - for those who incur losses for years before starting to make a profit. But in the case of SpaceX, the situation is somewhat different.
Musk has transformed SpaceX into one of the world's most influential companies, dominating the space industry with its rockets and Starlink satellite internet service. It has been the jewel in the crown of his business empire and a significant source of his wealth and power.
Indeed, SpaceX incurred losses, investing billions of dollars in the development of its business. Uber, Amazon, Tesla, and other technology companies also did not make a profit for many years. But SpaceX grew, developed, and was eventually valued at over $350 billion, according to startup tracker PitchBook.
This made SpaceX one of the most expensive private companies in the world, the NYT emphasizes.
Thanks to tax benefits legitimized by Trump in the last decade, SpaceX applied a carryforward of almost $3 billion to subsequent periods.
In addition, according to documents, the company had $227 million in carried-forward losses that could offset state income taxes. SpaceX also had over $1.1 billion in other federal and state tax credits.
Addition
However, The New York Times article notes that, according to documents, SpaceX did pay some income taxes over the years. But, "probably not to the federal government."
In one document, the company stated that it expected to pay $483,000 in income tax to foreign governments and $78,000 in state income tax in 2021.
Separately, it is reported that $6,000 in income tax was paid in 2020 and 2021. However, it is not disclosed whether these payments were made to the federal, state, or local government.
Recall
SpaceX continues to receive multi-million dollar contracts from the US government, despite Musk's calls to cut federal spending.