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 troubles get this kind of cash loan advance given to them. The legality of the BP tax credit is under debate. The government is going to end up paying more for the oil spill cleanup than they intended with tax credits like this. Article resource – BP planning to take a $ 10 billion tax credit by Personal Money Store.
BP tax credit
Companies with a lot of financial trouble can, according to the IRS, take out a tax credit. BP lost $ 17 billion in just the second quarter of this year. BP stock falling is where most of this loss comes from. BP hasn’t needed to borrow any money yet, although it is losing quite a bit of money.
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 cleanup of the oil spill bill. BP said they’d pay at least $ 20 billion for the oil spill. If the government gives BP $ 10 billion, then the government essentially paid half of that bill.
Those against the BP 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 SEC accepted $ 535 million from Goldman Sachs while Goldman Sachs tried to write it off on their taxes, which is the only thing this situation even compares to. Nobody has ever tried to do this before, where they take out loans till payday but then writing the loans off.
Why to give BP the tax credit
Although it seems the tax credit shouldn’t be given, there may be some reasons to consider giving BP this credit. BP is expected to pay for every little thing involved within the oil spill cleanup. Quick payday 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 can’t stay in business and won’t be able to pay for any of the cleanup. The IRS will decide if that is the case or not though.
Find more details on this subject
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
