Sen Nelson Asks Finance Committee To Examine BP Tax Deductions

By Tennille Tracy Of DOW JONES NEWSWIRES WASHINGTON (Dow Jones)--Sen. Bill Nelson (D., Fla.) is asking the U.S. Senate Finance Committee to investigate a $10 billion tax deduction that BP PLC (BP, BP.LN) is claiming on oil-spill clean-up costs and damages. The request follows the release of BP's second-quarter financial results, which showed the company taking a pretax charge of $32 billion to cover the costs of the Gulf of Mexico oil spill over the next several years, resulting in a $10 billion reduction in taxes. Tax experts have said there is nothing unusual about BP's actions. But given the public outcry over the Gulf spill, and the political sensitivity surrounding the issue, it isn't surprising that lawmakers have been quick to weigh in. "I was appalled upon learning that BP intends to shift nearly $10 billion of the costs related to the Gulf oil spill to the backs of American taxpayers, including the very taxpayers whose lives have been devastated by the spill," Nelson said in a letter to the finance committee Wednesday. "Simply put, that would be unacceptable." Nelson asked committee leaders Chairman Max Baucus (D., Mont) and ranking member Charles Grassley (R., Iowa), to examine whether BP should deduct the full cost of a $20 billion escrow fund that it created to cover damage claims. He also asked the committee to look at whether BP will deduct legal expenses incurred in defending against nondeductible fines and penalties. Nelson also asked, "as a basic policy matter," whether it is appropriate for BP to claim deferred tax benefits as a result of negligent actions. -By Tennille Tracy, Dow Jones Newswires; 202-862-6619; tennille.tracy@dowjones.com (Neil King Jr. contributed to this article.) (END) Dow Jones Newswires July 29, 2010 14:51 ET (18:51 GMT)