BP offsets spill costs to save $10 billion in tax

MSNBC

Oil giant BP said it plans to offset the entire cost of its Gulf of Mexico oil spill against its tax bill, reducing future contributions to U.S. tax coffers by almost $10 billion.

BP took a pretax provision of $32.2 billion in its accounts for the period, for the cost of capping the well, cleaning up the spill, compensating victims and paying government fines.

However, the net impact on BP's bottom line will only be $22 billion, with the company recording a $10 billion tax credit, most of which will be borne by the U.S. taxpayer, a spokesman said.

Don't know if this was posted already, I did a search but nothing came of it.

I cannot believe the balls on this company to taunt us in this manner. If this is allowed to happen I firmly believe we as the people of the US should do everything in our power to bar BP from selling any products in our country to recoup their costs.

I'm infuriated right now to say the least.

Kharron

edit: typo

[edit on 27-7-2010 by Kharron]

Well that's accounting practices for ya.
If we didn't have it that way many small businesses wouldn't be here because they wouldn't be able to afford to.

I don't see anything illegal going on here though. Still, a slap in the face to taxpayers.

BP's bottom line will only be $22 billion

ONLY!

Ok, maybe I don't know the accounting here, but tell me if this is right.

Let's say I own a business that makes pet food. I sell my product and I pay taxes on my sales. Turns out the food kills pets and I have to pay penalties to people whose pets died. Is that a tax break? I'm at work and cannot look all this up right now, so if anyone knows please help out.

My opinion is, you pay taxes on your sales. If you ^&*% up and you have to pay fines and fees to correct your own fault, that is not a tax break. Forgive me if I'm wrong but that should not be covered by US taxpayers but by the company who did not care about operational safety.

Kharron

reply to post by Kharron


Well, I think its terrible but I always remember something my dad told me, we must play by their rules. If our government sets those rules, we should not hold BP accountable for playing by them, we should hold our government accountable for making the rules in such a disgraceful manner.

SACK THE INCUMBENTS THIS NOVEMBER!

I dislike BP as much as the next guy, and I lived on the gulf for 10 years, but its not their fault our government is stupid, its our fault. Lets just make sure they or another cannot do this again in the future.

I hate to say it but the cost of the cleanup is a deductible loss against income. Individuals and corporations only pay taxes on income. If BP has spent that much on the oil spill then it can't really be taxed as income, can it?

It sucks given this particular situation but no one has ever complained before that businesses get to write off expenses in order to not pay taxes on them and that is what is fair.

Also, don't forget that the money the have spent on cleaning up this oil spill went into someone else's pocket who will have to pay taxes on some if not all of it. That's just how it works. SOMEONE will be paying taxes on the cost of the cleanup.

reply to post by Kharron


Remember, some of the money they are writing off is for the cost of the cleanup. Some of it is in legal fees, and some of it is the payments made to victims as a result of the legal outcomes. I am not exactly sure, but I know 100% that at least all but the victim compensation is deductible. I'm not sure if they can write off the victim compensation though.

edit to add: this is what I found in a quick search. I'm pretty sure it would apply here too:

Settlement payment held deductible under Sec 162(a)

Edit to add more: My personal opinion is that businesses should not be able to write off settlements or money paid to someone as the result of being found libel in a court case.

[edit on 27-7-2010 by nunya13]

[edit on 27-7-2010 by nunya13]

reply to post by nunya13


Thanks for looking that up. And I fully agree, it should not be deductible if a business is paying reparations for their own misconduct.

Originally posted by Kharron

Let's say I own a business that makes pet food. I sell my product and I pay taxes on my sales. Turns out the food kills pets and I have to pay penalties to people whose pets died. Is that a tax break? I'm at work and cannot look all this up right now, so if anyone knows please help out.

Kharron

I would write it off as an unexpected business expense or something. Maybe if it was a fine from a court, then you probably wouldn't be able to, although I'm not 100% sure. If you just pay the people for what happened then that's an expense, and can be deducted.