Lucent's Lucre

If Homer Simpson worked for telecom equipment maker Lucent (NYSE: LU  ) , there's little doubt that last Friday the air at Lucent HQ would've been pierced by an ecstatic "Woohoo!" heard miles around. In fact, even in Homer's absence, I'm pretty sure that sentiment was voiced more than once.

On Friday, in contrast to the company's recent relations with certain other government agencies, the U.S. Internal Revenue Service brought Lucent a gift: an $816 million tax refund. That'll buy a lot of Krispy Kreme (NYSE: KKD  ) doughnuts.

The refund, which the IRS preliminarily granted in part in June 2004, arose from Lucent's request last year to apply its 2001 operating losses to the corporate income taxes it had paid as far back as 1996 (when it was still part of AT&T (NYSE: T  ) ). From 2000 until the end of last year, of course, Lucent has been unprofitable and thus has not had to pay any federal income tax.

The company plans to accept the IRS's gift in the form of a tax benefit in fiscal 2005. While Lucent would probably love to get started on availing itself of the benefit right away, the company pointed out that the refund is still just hypothetical at this time. Before Lucent can take the benefit, it needs to await the results of an IRS audit of its 2001 tax return (they're still not done?), as well as approval by the Congressional Joint Committee on Taxation. And you thought you had trouble getting a tax refund!

Want to read more about Lucent's potential for a turnaround? Try:

• Bill Mann evaluates the quality of Lucent's earnings.
• Ben McClure assesses the quality of Lucent's R&D department.

Fool contributor Rich Smith owns no shares in any company mentioned in this article.