BP Scores $10B Tax Credit by Offsetting Cash

(CBS/AP)  While BP took a $17 billion loss in the second quarter, the financial news isn't all bad for the beleaguered oil giant.

That's because the amount the oil company set aside to cover the costs of the oil spill will end up saving the oil giant $10 billion in U.S taxes, according to an msnbc.com report.

BP set aside $32.2 billion for the cost of the spill, a charge that led to the $17 billion quarterly loss. But according to the msnbc.com report, BP plans to offset the entire cost of the spill against its tax bill, which will slash its U.S. taxes by $10 billion.

Special Section: Disaster in the Gulf

The $32.2 billion pretax provision was set up to pay for cleaning up the spill, compensating victims and paying fines. The $10 billion tax credit means the beleaguered oil company's net loss would be roughly $22 billion.

BP Posts Record $17B Loss in 2nd Quarter

According to msnbc.com, analysts said BP's tax break could stoke more ire among U.S. taxpayers and politicians but a company spokesman defended the move.

"This is just normal practice. If you declare an income, you have to pay tax on it - it's the way tax laws are set up," BP spokesman Toby Odone told msnbc.com. "We will pay less in tax because we are earning less, as you would as an individual if you were earning less."

[Elliander]

In other words BP plans to shift the entire financial responsibility onto US Tax Payers. Despite the fact that the event was entirely preventable and the result of criminal conduct (they drilled deeper than they had permits for, which is criminal) they plan to take no responsibility.

All this at a time when gas prices are going over $4.00 a Gallon. Does anything really believe the higher gas prices are justified when profits continue to go up? So basically they want to price gouge at the pump and at the taxes.

... It must be nice to be able to write off criminal activities that devastate several industries and biospheres.

[cloggervic]

Don't complain about the US govt - complain about the stupid people who elect them, like those who believe the above story, which is a complete lie.

DO NOT LET YOURSELF BE RILED BY FALSE STORIES INTO SUPPORTING PARTICULAR POLITCAL POSITIONS. THAT IS PURE MANIPULATION BY LEFT-WING MEDIA. BE AWARE OF IT AND BE SCEPTICAL

BP does not receive any tax credits. A "tax credit" is a deduction direct from US taxes, like the tax credit for foreign tax paid that you can claim on your US return. Taking a tax credit gives a much bigger reudction in your tax bill than the alternative method, which is to use the foreign tax paid as a deduction against income. The latter only saves the tax on the tax!

BP does not get a tax credit. It is simply that the massive cost of the spill has erased its profit, so there is no profit to tax.

The $10b given to the EPA achieved absolutely zilch, and the US would be far better off if that agency was closed down and the money given to people who would actually pick up shovels and clean up the mess.

[Lifeson2112]

by USA_is_back July 27, 2010 11:44 AM EDT
What do you think Repubs - should we apologize to BP again and give them MORE tax breaks???
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Why would Republicans want to do that USA? Only one person apologized to BP for Obama's political grandstanding. Not the entire party.

And BP is using an existing tax loophole like John Kerry used when he moored his yacht in Rhode Island instead of Taxachussettes to save $500,000. BP is just behaving like any good Democrat would by Kerry's example. Or maybe Geithner's. Or maybe Daschle's. Or maybe Rangle's. I don't know, they all seem to run together anymore. Just remember, this is going on under Obama's watch!

[buckn]

Oh, for Christ sake! You have got to be kidding me! And, Uncle Sam will, no doubt, let them get away with this.
So, does this mean that, if I get a speeding ticket, I can deduct it from MY earnings and take a tax credit?

[sjc_1]

This shows how absurd the U.S. corporate tax system is. It has been so lobbied that now the corporations pay much less of the federal budget than they did. How low can you go is the name of the game.

[thy-only_king]

Keep up the good work Obama, keep pushing BP.
Know you have cost the the U.S. tax payers
another " 10 BILLION DOLLARS "
Damn, Obama has 2 years 6 months 2 days 12 hours 40 minutes
before he will be out of office.

[tomanyt]

All Tax Credits should be done away with. The government give out more than it takes in.

[Lifeson2112]

Why don't we just get rid of entitlements and excess spending? Then we could actually LOWER taxes!

[thanksgreed]

SURPRISE..