- 11 - disallowed and that Exxon’s representatives agreed constituted nondeductible capital expenditures because they led to commercially exploitable energy resources that produced income for Exxon over the course of a number of years: Year Capitalized G&G Costs 1972 $ 2,029,833 1973 4,114,117 1974 9,289,354 1975 8,701,886 1976 9,359,770 1977 16,631,441 1978 21,757,729 Proratables Adjustment The second of the four major agreed adjustments (referred to by the parties as the “proratables adjustment”) was made only for 1972 through 1976 and involves the characterization or allocation of certain of Exxon's administrative expenses between U.S. and foreign sources. Allocations of Exxon's expenses to foreign sources decreased Exxon's foreign source income and reduced foreign tax credits that Exxon could claim against its U.S. tax liabilities. Similar to G&G activity, Exxon’s and respondent’s representatives generally agreed as to the applicable law relating to the allocation of administrative expenses between U.S. and foreign sources. Upon receipt during the audits from Exxon's representatives of information relating to Exxon'sPage: Previous 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 Next
Last modified: May 25, 2011