« The List of Fake News Sites | Main | Can Apple Move iPhone Production To The United States? »

Monday, November 28, 2016


Feed You can follow this conversation by subscribing to the comment feed for this post.

Chanson de Roland

While the deductibility of settlements as a business expense is debatable, it is not as easy a question of right or wrong as it may seem. Every active business of any size will be sued; it is simply part of and a cost of doing business. Some of those suits will have merit, while others won't, but suing and particularly being sued or at least the risk of being sued is part of being in business. So the question becomes this: If being sued is part of being in business, then why shouldn't at least damages and remedies arising from a civil suit be deductible just like any other business expense? The answer today is that such remedial expense arising from a lawsuit should be and are deductible. Penalties and fines, however, aren't deductible, because committing crimes or engaging in acts involving moral turpitude are not part of the normal and permitted course of doing business and, therefore, are not business expenses and may not be deducted as such.

Where do Donald Trump's settlement of the lawsuit, supra, fit in this framework. Was there a violation of criminal law or even of civil law? Had the case or rather cases gone to trial and criminal fraud or civil fraud or exemplary breach of contract or gross negligence, etc., been proven against Mr. Trump and/or his companies, then perhaps one could make an argument that Trump or his companies had committed a crime or had at least engaged in immoral acts. But that didn't happen here. What happened here was that Trump and the plaintiff and prosecutor settled their dispute, and it is black letter law that a settlement is in the nature of a contract, which does not determine liability or guilt on any of the laws at issue.

Moreover, both the plaintiffs and even more so the prosecutor received an ominous warning from the judge presiding over the case. It was reported that the judge having seem the parties pleadings and dispositive motions had warned the parties that they should settle the case. That is code, which every lawyer well understands, that the judge has problems with the case, and since it is the plaintiff or prosecutor who is alleging wrong, the judge is usually signaling plaintiff or prosecutor that their are weaknesses in his case that may well result in them losing as a result of a judicial disposition. So, while it can't be said with certainty, that the judge was telling plaintiffs that they would lose, a lawyer should urge his client, after such a judicial admonition, to negotiate seriously and accept the best viable offer must, because his failure to do so may result in him losing the case and getting nothing.

So the bottom line is that, whatever the merits of the deductibility of remedies, Trump's settlement, supra, even much more than other settlements, does not support the idea that the deductibility of his settlement is an instance of the tax payers subsidizing a person's, here Trump's, private wrongs, because there was no determination of wrong by trial, and because it seems that the judge thought that the plaintiffs’ case against Mr. Trump was weak.

Verify your Comment

Previewing your Comment

This is only a preview. Your comment has not yet been posted.

Your comment could not be posted. Error type:
Your comment has been saved. Comments are moderated and will not appear until approved by the author. Post another comment

The letters and numbers you entered did not match the image. Please try again.

As a final step before posting your comment, enter the letters and numbers you see in the image below. This prevents automated programs from posting comments.

Having trouble reading this image? View an alternate.


Post a comment

Comments are moderated, and will not appear until the author has approved them.

Your Information

(Name and email address are required. Email address will not be displayed with the comment.)


  • Updates via E-mail RSS Feed Updates via Twitter Updates via Facebook


  • Bloggers' Rights at EFF
  • George Jenkins, author of the I've Been Mugged Blog


  • © 2007 - 2017. George Jenkins. All Rights Reserved.


  • <$MTStatsScript$>