Saturday, July 29, 2006
Are settlements with DOJ tax deductible? According to Paul Caron, on the tax prof blog, Boeing has decided not to deduct. (see here). Some, however, are not too happy with DOJ, for not considering the tax implications when reaching the settlement. (see here). As stated by Senator Grassley in a press release:
"It’s good Boeing won’t seek a tax deduction for its $615 million settlement. That’s the right decision. However, Boeing’s lawyers believed the settlement was tax deductible. This tells me Department of Justice lawyers failed to take into account the settlement’s tax treatment and allowed Boeing’s lawyers to effectively negotiate a 35 percent discount. Any junior lawyer knows to look at a settlement’s tax treatment, yet Justice lawyers were asleep at the switch. That’s inexcusable. The Justice Department has to pay attention to the tax treatment in these big settlements."