BP hopes to get a $ 10 billion tax credit considering the losses they’ve taken; $ 17 billion within the second quarter and $ 32 billion in cleanup costs. Companies that have really big issues get this kind of cash advance given to them. . In the end, the U.S. Government may see more than half of the oil spill cleanup fund coming out of its own coffers.
Losses lead to BP tax credit
Companies with a lot of financial trouble can, as outlined by the IRS, take out a tax credit. In just the second quarter of this year, BP has reported losses of over $ 17 billion. BP stock falling is where most of this loss comes from. Though BP has not needed to borrow money fast to keep their operations going, they’re facing heavy losses.
BP tax credit and also the effect it will have
The government will end up paying half the expenses for the oil spill with a $ 10 billion tax credit being taken by BP. BP agreed to put $ 20 billion in an escrow account to pay for cleanup of the oil spill costs. If the government gives BP $ 10 billion, then the government basically paid half of that bill.
Arguments against BP’s tax credit
”I don’t think anybody would prefer that [BP] do that,” is what Press Secretary Robert Gibbs said about the BP tax credit. The only thing that compares is when Goldman Sachs tried to write off the $ 535 million penalty fee they paid to the SEC. It is an especially difficult situation because no other company has ever been in a situation like this — promising loans until payday to the U.S. Government, and then writing off those exact same loans.
Wanting the BP tax credit
As reprehensible as some people are saying the BP tax credit is, there is a possibly legitimate reason for them. BP is expected to pay for anything involved within the oil spill cleanup. Unless BP can stay solvent, then getting the quick money loan needed for the cleanup might be practically extremely hard. 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. If they are in that situation or not, though, is going to be up to the IRS investigation.
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
