Bank Of America Comments On Apple's Tax Woes

In a report released Friday morning, Bank of America analyst Wamsi Mohan provided some insight into how Ireland's decision to restructure its tax law will affect Apple Inc. AAPL.

Mohan began by saying investors have taken a worst-case scenario approach, which assumes a 12.5 percent impact on all pre-tax income that flows through Ireland. After performing his due diligence, Mohan believes this is too high of a rate and says a mid- to high-single digit rate is more likely. He also noted any changes will not go into effect until 2020.

In addition to his lower estimated affect, Mohan says Apple has options it could pursue to reduce its future tax expense, such as increase its debt load in Ireland thus increasing tax deductions, look for a more favorable tax location, or lobby for more tax deductions both in the U.S. and abroad.

Bank of America rates Apple a Buy with a $120 price objective.