BP taking $10 billion tax credit from Gulf spill

[jujuman13]

Link
BP taking $10 billion tax credit from spill - MarketWatch

Quote(Credit is allowed under federal rules, company says in earnings report)

I would not know, but am willing to bet my socks that someone in DP knows the answer.

Quote(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."
After $17 billion loss, BP shakes things up

The oil giant plans to sell $30 billion in assets, appoint a new chief executive and alter the way it does business. Bruce Orwall and Neal Lipschutz discuss.

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.)

I rather imagine this matter will run and run and run.

An interesting news report though.

 

[upsideguy]

Link
BP taking $10 billion tax credit from spill - MarketWatch

Quote(Credit is allowed under federal rules, company says in earnings report)

I would not know, but am willing to bet my socks that someone in DP knows the answer.

Quote(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."
After $17 billion loss, BP shakes things up

The oil giant plans to sell $30 billion in assets, appoint a new chief executive and alter the way it does business. Bruce Orwall and Neal Lipschutz discuss.

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.)

I rather imagine this matter will run and run and run.

An interesting news report though.

General accounting principles (GAAP) make the company talley its expected loss at the time the incident occurred. OTH, for tax return purposes, the loss can only be deducted when it is actually paid. Ultimately, this loss is deductible on the income tax return as a legitimate business expense, but for now, we are only talking about how things appear on BP's books.

A loss accrual of $32M would translate into a $9.x million tax savings making the after tax impact of the loss the net number of approximately $23M. Right now, BP gets to record this charge and let the stock market adjust accordingly. They do not, however, actually get the tax benefit until they after they have paid out the $32M.

All companies have two sets of books: those used for tax reporting purposes and those used for financial reporting purposes. Worry not, these books are reconciled on the firm's financial statements as well as the tax return. In general, companies report the tax effect well before the time they actually pay the tax.

 

[obvious Child]

Link

This is a poorly written article.

1) Not a credit
2) It's a business expense reducing taxable income
3) Deduction's effect is to reduce taxes by $9.9 billion.
4) They only get to take the portion that's not fines and penalties.

upsideguy

That's a big *** M-1 adjustment. I wonder if it's the biggest in manufacturing US history.

 

[jujuman13]

This is a poorly written article.

1) Not a credit
2) It's a business expense reducing taxable income
3) Deduction's effect is to reduce taxes by $9.9 billion.
4) They only get to take the portion that's not fines and penalties.

upsideguy

That's a big *** M-1 adjustment. I wonder if it's the biggest in manufacturing US history.

With regards to Fines and penalties, although I believe a bill has recently gone through Congress to increase the maximum amount.
This bill would have been AFTER the Gulf spill, so would the previous limitation apply to BP with regard to this incident?

 

[obvious Child]

With regards to Fines and penalties, although I believe a bill has recently gone through Congress to increase the maximum amount.

Not relevant. No corporation can deduct fines and penalties on their taxes regardless of any Congressional limit amount. BP can get fined a trillion dollars and they can't take a penny of it as a deduction on their taxes. They can deduct it on their financials, but it doesn't help them at all on their taxes. UPS deducts parking fines on their 10k, but they cannot take them as a deduction on their taxes.

There's this thing in federal taxation called "M-1s" which reconcile book and tax. Fines and penalties are added back to income on taxes.

This bill would have been AFTER the Gulf spill, so would the previous limitation apply to BP with regard to this incident?

The bill is irrelevant to BP's taxes. Upping their limit on fines will certainly hurt the company, but it won't help their taxes.

The amount BP is taking as a deduction stem from largely clean up costs, not fines and penalties.

 

[apdst]

This is a poorly written article.

1) Not a credit
2) It's a business expense reducing taxable income
3) Deduction's effect is to reduce taxes by $9.9 billion.
4) They only get to take the portion that's not fines and penalties.

upsideguy

That's a big *** M-1 adjustment. I wonder if it's the biggest in manufacturing US history.

OMG!!!! OC and I agree on something.

This calls for another beer...and then several more after that.