By Tim McLaughlin
(Reuters) – Chevron’s deal to acquire Hess will unlock $15 billion worth of tax benefits that were previously disregarded, as the combined company takes advantage of Hess’s past losses to reduce future payments, according to the company and tax experts.
The tax shield is a lesser-known advantage of Chevron’s mega-takeover of Hess, which was finalized last month. These tax benefits are expected to generate hundreds of millions of dollars in additional annual cash flow for the second-largest oil and gas producer in the United States over the next few years.
“The tax benefits were definitely considered in Chevron’s valuation of Hess,” said Donald Williamson, an accounting professor at American University’s Kogod School of Business. “The Hess losses will enable Chevron to significantly lower its tax rate for several years.”
The 1918 Revenue Act initially allowed corporations to carry forward their losses as tax benefits to mitigate large fluctuations in income over time. However, the losses only come…
2023-11-14 07:02:04
Article from finance.yahoo.com
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