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About that $20 Billion in escrow

hypocritexposer

Well-known member
It would be considered an expense incurred in the first year, correct?

How much will it save BP in taxes?

The US will lose about $10 billion, by some calculations.
 

Steve

Well-known member
(D) 35 percent of so much of the taxable income as exceeds $10,000,000.

but when added to the double taxation of earnings.. ??? a U.S. dividend tax which can be anywhere from 5% to 35% but usually falls in the 28% bracket..

so 35% and 28%.. 63%.. ????

can't pay taxes on income on dividends you don't get... or income you have spent on expenses so it will result in a reduction of tax revenue.
 

Steve

Well-known member
BPplc is a global energy company headquartered in London, United Kingdom. It is the third largest energy company and the fourth largest company in the world

Around 40% of BP shares are held by UK shareholders, and 39% in the USA.

so the real loss in US taxation would appear to not be as much as half..
 

hypocritexposer

Well-known member
I've seen different estimates for total taxes saved, here's one. I'll see if I can find the other one that I read.

And if they incur a loss due to cleanup costs etc, they would also be eligible to carry over those losses for a couple of years to reduce taxes owed, would they not?

The moratorium will also cost BP and other companies income that they will not be paying taxes on.

BP is forecast to pay about $10-billion (£6.7-billion) less tax over the next four years as it meets the costs of its huge oil spill in the Gulf of Mexico, hitting the revenues of Britain and the U.S. that receive hundreds of millions of dollars from the company each year.

The shortfall, representing a drop of more than a quarter in BP’s tax payments, is a particular concern for the British government attempting to cut the country’s budget deficit.

Of its principal expected liabilities, only the fines that might be imposed by the U.S. authorities would definitely not be tax-deductible.

BP on Monday reiterated the possibility that by the end of the week its leaking Macondo well could be shut off, or all the oil could be captured, using the new cap now being fitted to the well head. The suggestion sent BP’s shares surging, closing 9.11 per cent higher in London, but the company still faces huge and uncertain liabilities, estimated by analysts at about $50-billion.

http://www.theglobeandmail.com/report-on-business/spill-costs-to-cut-bp-tax-bill-by-10-billion/article1638016/


Here's another opinion:

1. BP will establish a $20 billion fund, but will pay only $7 billion into it during 2010.

2. BP is a British corporation, but has a very large operating entity in the US.

3. By Generally Accepted Accounting Principles (GAP), BP must book the entire $20 billion expense in the year accrued. Therefore, they will book a $20 billion expense in 2010, reducing their US tax liability by $7 billion.

4. Our anointed leader also convinced this massive corporation to show their concern for the "small people" by withholding dividends to their shareholders for the last 3 quarters of 2010. This reduces their outward cash flow by about $7.5 billion, including approximately 40% of that amount to US citizens. Assuming that the Bush tax cuts will survive through 2010, the US Treasury will lose another $450 million in taxes on that amount. We won't even discuss the effect on the US economy.



BP Cash Flow:

· Escrow funding ($7 billion)

· Dividend saving $7.5 billion

· Tax savings $7 billion

· Net favorable cash flow : $7.5 billion

US Treasury Tax Receipts:

· BP Corporate income tax ($7.5 billion)

· BP Shareholders' income tax ($0.45 billion)

· Net unfavorable tax receipts ($7.95 billion)
 

hypocritexposer

Well-known member
Here's How BP Plans To Grab A $10 Billion US Tax Credit


Dian L. Chu | Jul. 27, 2010, 10:42 PM


There was no shortage of news from BP on Tuesday:

The oil major reported its first quarterly loss--$17.15 billion--in eighteen years, and will sell about $30 billion in assets.

The company also announced that CEO Tony Hayward will step down on Oct. 1 to work at TNK-BP--BP’s joint venture in Russia.
Bob Dudley, an American BP executive, will succeed Hayward as the new Chief Executive

The more eyebrow-raising news; however, is that BP plans to claim almost $10 billion in U.S. tax credit as a direct result of the Gulf oil spill. Here is how the tax code and math work.

Under the U.S. corporate tax law, companies can take credits up to 35% of their loss. Since BP reported $32.2 billion charge related to the cost of the spill, 35% of that will give you roughly $10 billion in credit. So BP’s claim is pretty much what its spokesman said.

"This is the accounting process, we are going by U.S. laws.”
The intention of the tax code is to encourage investments and to help companies even out profit and loss, along with the associated taxes. Lawmakers just forgot to incorporate a rider clause for public safety and/or environmental damage related expense.

The tax credit, if claimed, could mean $10 billion of the Gulf aftermath costs would come out of taxpayers’ pocket. This could potentially be quite an embarrassment for the Administration as President Obama vowed that BP will "pay every dime owed" for the spill damage.



Of course, BP could conceivably “do the right thing” and drop its tax credit claim to avoid a crashing tsunami of public anger and outrage. However, don’t expect BP to give up on this sizable cost offset that easily, since BP has made considerable concessions such as a voluntary $20 billion oil spill fund, and speculation of U.S. government’s involvement in Hayward’s dismissal and Dudley's appointment.

As reputation goes, it is hard to imagine the IRS would let this $10 billion slip by. Could revenge of the IRS be in the cards, or as Leona Helmsley famously said “Only the little people pay taxes”?



Read more: http://www.businessinsider.com/heres-how-bp-plans-to-grab-a-10-billion-us-tax-credit-2010-7?utm_source=feedburner&utm_medium=feed&utm_campaign=Feed:+TheMoneyGame+(The+Money+Game)#ixzz0uwrpK3a8
 
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