[QUOTE=tengineer1;183048]Yes something good will come from this ! BP can spread the payment out over 16 years AND deduct it from their taxes as a normal business expense since most is not a “fine” thanks to a federal judge. The Wall St Journal says…
BP PLC has agreed to pay more than $20 billion to settle claims over its 2010 oil spill in the Gulf of Mexico – but the giant oil company won’t actually be paying that much.
BP will be able to deduct a big chunk of the settlement for tax purposes, effectively slicing billions of dollars off the amount it will actually pay. The U.S. Public Interest Research Group, a consumer advocacy group, estimated that BP will be able to deduct about $15.3 billion of its expenses from the settlement approved by a federal judge this week.
That has drawn fresh attention to the practice of deducting settlement costs, which has been spotlighted several times in the last few years when big banks agreed to huge settlements that also allowed them to take multi-billion-dollar tax deductions. The practice is legal, but critics say it means taxpayers effectively bear part of the settlements’ burden and don’t get an accurate picture about how much companies are really paying.
Under federal law, companies aren’t allowed to deduct fines or penalties they pay as part of a settlement. But only $5.5 billion of the total cost of the settlement is a fine. The remainder, including the billions of dollars BP will pay to the U.S. and five Gulf states to cover environmental damage, can be classified as “ordinary business expenses,” which are deductible.[/QUOTE]
A Deduction is different than a credit. A deduction is taken off of income, a credit is a direct reduction of the amount of tax that is due. Very different things. So there tax bill is not going down by 15.3 billion. They can deduct 15.3 billion from there profits. That is what there tax bill is based on.