BP taking $10 billion tax credit from Gulf spill

Discussion in 'Economy' started by hvactec, Jul 27, 2010.

  1. hvactec

    hvactec VIP Member

    Jan 17, 2010
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    LOS ANGELES (MarketWatch) -- BP PLC will reduce its contribution to U.S. coffers by roughly $10 billion due to a tax credit the company is claiming it incurred from the Gulf of Mexico oil spill.

    The oil giant /quotes/comstock/13*!bp/quotes/nls/bp (BP 37.97, -0.03, -0.08%) said Tuesday that it is incurring a charge of $32.2 billion from the Deepwater Horizon disaster response, and as such, it is claiming a $9.9 billion taxation credit.

    Asked in a conference call Tuesday about whether it has discussed the tax credit with President Barack Obama's administration, BP's outgoing chief executive, Tony Hayward said: "We have followed the IRS regulations as they're currently written."

    The Internal Revenue Service said it's not allowed under federal law to discuss individual taxpayer issues.

    But the issue has raised red flags among federal officials, particularly in light of recent efforts by various other entities that have settled with the United States.

    White House Press Secretary Robert Gibbs said the following in a briefing with reporters: "I don't think anybody would prefer that [BP] do that." Gibbs, however, did not say whether Obama would discuss the issue with BP.

    One notable example of a company that decided to forgo a deduction is Goldman Sachs Group Inc. /quotes/comstock/13*!gs/quotes/nls/gs (GS 147.20, -0.03, -0.02%) , which agreed last month not to write off $535 million in penalties as part of its settlement with the Securities and Exchange Commission. The SEC had sued Goldman Sachs, alleging that it hid critical information from investors in its mortgage securities.

    SEC officials had come under fire from Congress for previously allowing tax deductions from penalties in other cases.

    Analyst Fadel Gheit of Oppenheimer & Co. called the tax credit the result of "straightforward costs related to operation."

    But at least one Democratic lawmaker, U.S. Rep. James Oberstar of Minnesota, chairman of the committee on transportation and infrastructure, is appalled. "BP's decision to claim a nearly $10 billion tax credit stemming from costs it incurred during the oil spill cleanup is nothing short of reprehensible," he said in a statement.

    "At a time when the Gulf Coast is reeling from this catastrophic economic and environmental disaster, the last thing the region needs is for BP to substantially offset the amount it is paying to meet its responsibilities for cleanup and compensating victims," Oberstar added.

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    BP taking $10 billion tax credit from spill - MarketWatch
  2. CrusaderFrank

    CrusaderFrank Diamond Member

    May 20, 2009
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    Extortion is tax deductible
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