BP hopes to get a $ 10 billion tax credit considering the losses they’ve taken; $ 17 billion in the second quarter and $ 32 billion in cleanup costs. Companies that have really big issues get this kind of cash loan given to them. The BP tax credit legality is discussed amongst numerous people nevertheless, and there is no answer yet. The government is going to end up paying more for the oil spill cleanup than they intended with tax credits like this. Source of article – BP preparing to take a $ 10 billion tax credit by Personal Money Store.
Losses lead to BP tax credit
Tax credits like these are accessible to all companies that are in some severe financial trouble. This year’s second quarter cost BP $ 17 billion. Most losses from BP come from its stock falling so much. BP is quickly losing profit despite the fact that borrowing money hasn’t been a question so far.
Economic effect of BP tax credit
If BP does take the $ 10 billion tax credit, the U.S. Government could well be left holding half the oil spill cleanup bill. 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.
No BP tax credit
”I do not think anybody would prefer that [BP] do that,” is what Press Secretary Robert Gibbs said about the BP tax credit. The only even slightly comparable situation is where Goldman Sachs agreed to not write off the $ 535 million penalty 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.
Arguments for the BP tax credit
As reprehensible as some individuals are saying the BP tax credit is, there is a possibly legitimate reason for them. BP is expected to pay for everything involved within the oil spill cleanup. Quick money loans will be the only BP can pay for the cleanup unless they find a way to stay solvent. BP makes the argument that without the $ 10 billion, they cannot stay in business and won’t be able to pay for any of the cleanup. The IRS will choose if that is the case or not though.
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
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