Paul L. Caron

Wednesday, January 28, 2015

BP Can Deduct 80% of Gulf Oil Cleanup Payments

BP Logo (2015)U.S. PIRG, Real Value of Deepwater Horizon Disaster Payments Depend on BP’s Tax Deductions:

As British Petroleum (BP) goes through the final phases of closing out its liabilities under the Clean Water Act, public understanding of the real value of the corporation’s payments to address the damage caused by the Deepwater Horizon disaster must include the tax deductions BP has taken and will likely take by writing the payments off as ordinary costs of doing business. ...

Over 80 percent of the total money BP has paid in connection with the Gulf oil spill so far qualifies for tax deductions. Only the Department of Justice’s $4 billion criminal fine and the SEC’s $535 million penalty were explicitly non-deductible by law. Any Clean Water Act payments will likely be non-deductible, because they will qualify as legal penalties, and the EPA, unlike many agencies, tends to be explicit that such payments be regarded as penalties. ...

Type of Payment

Tax Status

Amount Paid

Potential Tax Deduction

Damages paid to individuals/businesses


$13 billion

$4.55 billion

Penalties to the DOJ and SEC


$4.5 billion


Cleanup Costs


$15 billion

$5.25 billion

Anticipated future damages


Estimated $18 billion

$6.3 billion

Anticipated NRDA payments


Estimated $1 billion

$350 million

Anticipated Clean Water Act penalties


Maximum $13.7 billion


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I haven't had a math class in a while but that total for the "Potential Tax Deduction" column seems to be a lot less than 80% of the total for the "Amount Paid" column.

Posted by: therealanon | Jan 28, 2015 10:37:27 AM