Senate tax plan takes aim at oil firms

[imported_dem]

http://www.marketwatch.com/news/yhoo/story.asp?guid={35D11266-3C9C-4FFB-AE91-07AB36AF1D97}&siteid=myyahoo&dist=myyahoo


To help offset the lost revenues, the bill approved by the Senate Finance Committee Tuesday includes a provision that would raise nearly $5 billion in revenues by preventing oil companies from deducting the full cost of oil inventories.

Specifically, the measure applies the "last-in, first out," or LIFO, inventory accounting method used by firms in a number of U.S. industries. Under LIFO, items acquired last are assumed to be sold first.

The Senate proposal would require integrated oil firms with annual sales of more than $1 billion to revalue their crude-oil inventories by adding 75% of the increase in the price of crude between the end of 2004 and the end of 2005.

The Joint Committee on Taxation estimates the change would result in $3.964 billion in additional revenues in fiscal 2006, and $959 million in additional revenues in 2007.

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