Displeased with Tax Bill, Yahoo Mulls Future Strategy

Ken Goldman, Yahoo’s CFO

Yahoo CFO Ken Goldman has made no secret of his displeasure over the taxes associated with its stake in Alibaba Group, the largest e-commerce business in China. Not only did Yahoo have to pay on the $7.6 billion sale in its Alibaba stake, but it will also be hit with high taxes again when it sells the remaining half of its 40% stake. To date, Yahoo has paid over $2 billion in taxes associated to its Alibaba sale, according to Goldman.

Since 2005, Yahoo’s tax concerns related to Alibaba have been as tumultuous as its succession of CEOs. Yahoo once owned 75% of the Chinese firm, but high taxes and strained business relationships steadily reduced Yahoo’s stake. Still, the hefty tax bills Yahoo faces are uncomfortably high for CFO Ken Goldman.

While Yahoo seeks to find a tax-free way to divest the remaining Alibaba stake, it must also remember that Alibaba is a large contributing factor behind the comeback of Yahoo’s stock prices. As CFO Ken Goldman and other top executives at Yahoo mull their Alibaba consideration, they must also work to ensure they don’t negate the benefits they’ve reaped from the Chinese e-commerce business.

Tax Reminders for Small Business CFOs

Though tax day has already passed, tax season is never truly over for CFOs. Yahoo’s tax situation concerning its Alibaba stake is a reminder for CFOs everywhere to be ready for unpredictable tax issues. Whether it’s an unexpected tax audit or hefty tax bills, there are actions CFOs can take today to lesson their company’s tax burdens tomorrow. These include:

  1. Identifying likely culprits. Similar to Yahoo seeking to eliminate tax concerns by reducing its Alibaba stake, small business CFOs can be proactive in reducing costs and spotting any tax concerns. One of the simplest ways to do this is to look at areas that have previously caused problems, as they are likely to resurface again.
  2. Watch significant transactions. Keep a paper trail of everything pertaining to a major transaction, even documents and emails not directly related to the sale. This saves time and money in the long run if the transaction ever raises tax concerns.