DOJ Allows Bank of America to Deduct $12 Billion of $17 Billion Settlement
Bank of America will pay roughly $4 billion less to the government after-tax than the $16.65 billion it agreed to in a settlement over soured mortgage securities, because parts of the settlement will be tax deductible, the bank said Thursday.
The bank has already taken some of the savings from the settlement's tax deductions in previous quarters, so the savings won't all come in the current third quarter. But tallying the total tax savings to roughly $4 billion "would be fair," a bank spokesman said.
Federal law allows companies to deduct large portions of the costs of settling with federal agencies on their tax returns. But that effectively shifts part of the settlement's burden to taxpayers, and some lawmakers and consumer advocates have expressed concerns that the public can be misled when regulators tout giant settlement amounts that companies aren't fully paying. ...
Fines and penalties imposed as part of a settlement can't be deducted, so that knocks out the $5.02 billion in fines Bank of America agreed to pay. But other amounts paid can be deducted as ordinary business expenses—including the $4.63 billion in compensatory payments that Bank of America agreed to pay, and the costs it incurs in providing $7 billion in mortgage modifications for struggling homeowners and other consumer relief.
"Criminal and civil fines are not deductible, but pretty much everything else is," said Robert Willens, a tax and accounting expert who has his own firm, Robert Willens LLC.
That means that up to $11.63 billion of the settlement would be deductible, depending on how much the bank incurs in costs associated with the consumer relief. With a corporate tax rate of 35%, that suggests savings of $4.07 billion. Bank of America said last month that it expects an effective tax rate of about 31% for the second half of 2014, absent any unusual items, and that would suggest savings of about $3.6 billion.
http://taxprof.typepad.com/taxprof_blog/2014/08/doj-allows-bank-of-america-.html
Good thing it wasn't an alleged box of cigars
= new reply since forum marked as read
Once issued, an executive order has the force of law and can serve as the basis for challenges in court.
Current tax law is actually fairly clear about what part of a government settlement may or may not be deducted. Punitive fines and penalties can't be deducted; restitution and compensation can. But the Justice Department, unlike other federal agencies, does not always clearly spell out in its agreements how certain types of payouts should be classified. If Holder and the DOJ classified the type of penalty, then there wouldn't be a loophole the banks are using when paying a fine ("stipulate that the loophole is not in effect when paying."
The legislation proposed would force the government to clarify in advance how penalties and fines should be treated, thus heading off such future disputes. But JPMorgan could still be allowed to write off certain parts of its settlement as a business expense. A summary of the legislation mailed to reporters reads, in part: "Amounts paid by corporations, which constitute restitution for damage caused by the violation of any law, are exempted and remain deductible."
Holder could say in writing that the "penalty is a punitive fine, and not subject to restitution and compensation."
And I resent the implication that I would like a dictatorship.
If that tells board members anything
Let alone DU.
https://finance.yahoo.com/echarts?s=BAC+Interactive#symbol=bac;range=1y;compare=;indicator=volume;charttype=area;crosshair=on;ohlcvalues=0;logscale=off;source=;
Oh, wait. No I wasn't. Silly me--what was I thinking? 
What happened in Ferguson was a tragedy and a wake up call. I wish people would get as passionate about the criminal banks stealing billions and getting away with it. 
