BP has paid $ 32 billion in cleanup costs and also lost $ 17 billion within the second quarter, so it plans on getting a $ 10 billion tax credit. Companies that have really big troubles get this kind of cash loan advance given to them. The BP tax credit legality is discussed amongst numerous people nevertheless, and there is no answer yet. The government may be angry when they realize they have helped pay for so much of the cleanup of the oil spill.
Losses that spurred the BP tax credit
Companies with a lot of financial trouble can, as outlined by the IRS, take out a tax credit. This year’s second quarter cost BP $ 17 billion. Most of this loss is from the falling prices of BP stock. BP hasn’t needed to borrow any money yet, although it is losing quite a bit of money.
How BP tax credit will effect things
The government will end up paying half the expenditures for the oil spill with a $ 10 billion tax credit being taken by BP. BP agreed at the very beginning of things to put $ 20 billion towards cleanup efforts. If the U.S. Government gets $ 10 billion less in taxes, though, then the net effect is halving BP’s cost of the cleanup.
What is said against the BP tax credit
Press Secretary Robert Gibbs, in a press briefing, commented on the BP tax credit by saying “I don’t think anybody would prefer that [BP] do that.”. The only thing that compares is when Goldman Sachs tried to write off the $ 535 million penalty fee they paid to the SEC. No other company has ever tried loans till payday and then trying to write those loans off like this.
Yes to BP tax credit
Although seems like the tax credit shouldn’t be given, there may be some reasons to consider giving BP this credit. BP has promised to pay all cleanup costs of the spill — which will prove to be expensive. BP needs to stay solvent or else there could be no way for them to pay for the cleanup without . BP makes the argument that without the $ 10 billion, they can’t stay in business and won’t be able to pay for any of the cleanup. The IRS can be the deciding factor on whether BP really needs the money or not.
Further reading
Daily Finance
dailyfinance.com/story/taxes/bp-claiming-9-9b-tax-credit-on-gulf-clean-up-costs/19571518/
Market Watch
miamiherald.com/2010/07/28/1749344/bp-eyes-10b-tax-credit-over-gulf.html#ixzz0uyReljAI
