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here is the context

In the quarter ended in March, IBM’s revenues rose by 5.1 percent to $19.1 billion, and its gross profits were up by 6.1 percent to $8.25 billion. There were a whole bunch of things that affected the bottom line in the quarter, including a settlement of two audits by the US Internal Revenue Service that gave it back $810 million, but IBM then took $610 million in restructuring charges for unspecified layoffs. The company also took some charges – IBM’s chief financial officer, Jim Cavanaugh, did not say how much – that pushed its overall systems business into the red ink.

Why did US IRS gave 810 to IBM? and what do they mean by saying bottom line?

closed as off-topic by James K, SamBC, Varun Nair, choster, Hellion Apr 10 at 18:41

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  • This is a financial rather than a linguistic question. My understanding is that the US IRS (the US tax agency) performed two audits, and that as a result of the settlement of those audits IBM recovered $810 million. It's not the IRS but the settlement of the two audits that gave IBM back that amount. – Gustavson Apr 1 at 2:27
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    You should have no trouble finding a definition for "bottom line". Post if you find something that doesn't make sense to you. – nasch Apr 1 at 3:04
  • do they mean the final balance sheet here ? – THEGreatGatsby Apr 1 at 3:46
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    I'm voting to close this question as off-topic because it is about finance, with only a tiny element of it about the meaning of terms (which could easily be looked up). – SamBC Apr 4 at 18:07
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The subject of this paragraph is the company IBM. So the "it" in the section you enquire about refers to that company.

"...two audits by the US Internal Revenue Service that gave it back $810 million..."

So the two audits resulted in a refund of $810 million to IBM. Effectively it was the audits that "gave" back that money.

The "bottom line" in accounting is the final figure you reach after your calculations. In simple terms, the amount of money received is set against all outgoings that are allowable for taxation purposes and the difference is taxable. An audit is a process that checks those calculations for mistakes. So I get from this that the initial calculations by the Revenue service were incorrect leading to an inflated "bottom line" and caused IBM pay $810 million more tax than they needed to. The audits corrected this and the money was returned.

  • I agree, but why an audit should return money to IBM? – THEGreatGatsby Apr 4 at 10:05
  • @THEGreatGatsby added detail to answer. – Astralbee Apr 4 at 10:07
  • thank you, but how an audit can be wrong for 810million dollars ? Sounds a little strange to me – THEGreatGatsby Apr 4 at 10:13
  • @THEGreatGatsby I agree it sounds a lot of money, but IBM is a big company. Also, a quick Google of this matter shows that this $810m was from US and foreign tax audits, so perhaps your source is slightly incorrect and this didn't all come back from the US Revenue service? – Astralbee Apr 4 at 10:18
  • @THEGreatGatsby Also... another quick Google shows that this refund was for "non-cash, tax benefits". I'm not an expert but I believe this refers to taxation of things that are not cash... so it may sound a lot compared to IBM's quarterly turnover but it may be that the incorrect taxation was applied to things like company assets, vehicles... non-cash things that should have been tax exempt. – Astralbee Apr 4 at 10:20

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