(Adds background on tax bill, provision by Goldman Sachs)
Jan 5 (Reuters) - Morgan Stanley said on Friday it would take a $1.25 billion hit in its fourth-quarter earnings due to a cut in corporate tax rate as part of the U.S. tax code overhaul. The net blow of the bill to the bank will include about a $1.4 billion net discrete tax provision, mainly due to the remeasurement of certain net deferred tax assets using the lowered corporate tax rate, the company said in a filing.
It would be offset by $160 million in other positive effects, Morgan Stanley added.(bit.ly/2m0QVsB)
The sweeping tax code changes enacted in late December cuts the corporate tax rate to 21 percent from 35 percent and were expected to mean short-term pain, but long-term gain for U.S.-based corporations.
Scores of large companies, including big banks such as Citigroup and JPMorgan Chase & Co, have socked away an estimated $2.8 trillion overseas in recent years.
The one-time tax on those earnings is expected to raise $339 billion in federal revenues over the coming decade, according to the Joint Committee on Taxation (JCT), a nonpartisan research arm of the U.S. Congress.
Morgan Stanley's arch rival Goldman Sachs Group Inc had said on Dec. 29 it expects its fourth-quarter earnings to decrease by about $5 billion due to repatriation tax, the cost of moving money from foreign countries to the U.S., Goldman said in a filing. (Reporting by Diptendu Lahiri in Bengaluru; Editing by Arun Koyyur)