Nov. 6 (Bloomberg) -- General Motors Corp., the world's largest automaker, said it will write down $39 billion of future tax benefits for the third quarter.

That probably will result in GM tomorrow reporting its biggest-ever quarterly net loss, exceeding the $21 billion the company posted for the first three months of 1992. The non-cash charge is related to deferred tax assets in the U.S., Canada and Germany, the Detroit-based company said in a statement today.

``It's a non-cash charge and non-recurring, so I think the market will shiver a bit about this and then get over it,'' said Burnham Securities Inc. analyst David Healy. ``If they get profitable, they can get this back on a bookkeeping basis.''

GM is writing down the tax assets because it may not be able to generate enough earnings before the benefits expire. The decision is another sign of a worsening outlook for the U.S. economy and auto sales, as GM cited ongoing mortgage-related losses at its partly owned GMAC LLC finance unit and ``more challenging near-term automotive market conditions in the U.S. and Germany.''

GM fell $1.06, or 2.9 percent, to $35.10 at 7:13 p.m. in trading after the close of the New York Stock Exchange. Earlier, the shares had risen 16 cents to $36.16 in NYSE composite trading. They had gained 18 percent this year.

`Cumulative Loss'

The automaker cited a ``three-year historical cumulative loss'' in the U.S., Canada and Germany for the charge, without elaborating. GM also cited the GMAC unit, which reported a $1.6 billion third-quarter loss on Nov. 1. GM sold 51 percent of GMAC last year to a group led by Cerberus Capital Management LP.

The automaker under U.S. accounting rules assesses the need each quarter for a so-called valuation allowance against the deferred tax assets. GM in 2005 took a valuation against tax assets in South Korea that it reversed later last year when the outlook for future profits improved. The automaker also took a similar charge in Brazil in 2005 that it reversed in 2006.

GM said it previously had determined it wouldn't need the allowance for the U.S., Canada and Germany because losses over the three-year period were caused by one-time expenses and because of the continued expectation of strong profits at GMAC and improved earnings in North America.

``The establishment of a valuation allowance does not have any impact on cash, nor does such an allowance preclude us from using our loss carryforwards or other deferred tax assets in the future,'' Chief Financial Officer Fritz Henderson said in the statement.

The allowance also doesn't ``reflect a change in the company's view of its long-term automotive financial outlook,'' Henderson said.

Most of Total

GM reported deferred tax assets of $34.8 billion in the U.S., $3.1 billion in Canada and $2.5 billion in Germany as of the end of last year, in an annual regulatory filing in March. The three countries accounted for $40.4 billion of GM's $40.8 billion in such assets, according to that filing.

The third-quarter results including the tax-related charge may overshadow GM retaking the No. 1 spot in worldwide sales from Toyota Motor Corp. Chief Executive Officer Rick Wagoner also took steps to reduce future costs by approving a labor accord that eliminates retiree health-care obligations and cuts new workers' pay by 50 percent.

Last month, GM reached an agreement with the United Auto Workers after a two-day strike to transfer $47 billion in future union retiree costs to the union in exchange for a one-time contribution of about $32 billion.

Wagoner had already reached labor agreements to close plants and cut health-care costs, which the company has said would reduce its costs by $9 billion this year.

GM has said the union retiree health fund will drain cash next year by $3.3 billion before adding $2.8 billion to cash flow in 2010 and $3.3 billion in 2011.

The net loss in 2006's third quarter was $147 million, or 26 cents a share. GM restated those results in March.

To contact the reporter on this story: Jeff Green in Southfield, Michigan at jgreen16@bloomberg.net

Last Updated: November 6, 2007 19:54 EST