Loading ...I don’t advocate irresponsible environmental behavior, but I’m shaking my head. It’s seems that shareholders in the miners just get bent every time.
BP’s $20.8 Billion Gulf Spill Settlement Nets $15.3 Billion Tax Write-Off
The government’s $20.8 billion out-of-court settlement with BP would resolve the charges related to the Gulf Oil spill. You might assume a fine of this nature is serious enough not to be tax deductible. But BP should be able to write off the vast majority, a whopping $15.3 billion. The proposed deal designates only about one quarter, $5.5 billion, as a non-tax-deductible Clean Water Act penalty. BP can write off the natural resource damages payments, restoration, and reimbursement of government costs.
One big critic of the deal is U.S. Public Interest Research Group, which often rails against tax deductions claimed by corporate wrongdoers. U.S. Public Interest Research Group has asked the Justice Department to deny tax deductions for BP and other corporate defendants in the past. The organization has a research report here (link) on settlement deductions. But a change to the tax code may be needed to have the desired effect.
The present tax code allows businesses to deduct damages, even punitive damages. Restitution and other remedial payments are also fully deductible. Only certain fines or penalties are nondeductible. Even then, the rules are murky, and companies routinely deduct payments unless it is completely clear that they cannot. read article at Forbes