Trump's tax deductible Trump U. settlement
Saturday, November 19, 2016
Donald J. Trump prefers to fight things out in court. Over the years as a businessman, the president-elect has filed and been named as a defendant in thousands of lawsuits.
Even as he prepares to be sworn in on Jan. 20 as the United States' 45th president, he will facing, as of today, more than 70 lawsuits filed against him.
Click certificate image for video report on settlement via KABC-TV Los Angeles.
But he's no longer worrying about Trump University allegations. Friday, Nov. 18, afternoon, Trump and his attorneys agreed to pay $25 million to settle three lawsuits that claimed the ostensible educational program bearing the billionaire's name bilked enrollees out of tens of thousands of dollars.
Why did Trump cave in these cases? Here are three likely reasons.
1. Timing. The California class action case was scheduled to go to trial later this month, Trump's lawyers were trying to get that postponed, but the prospects weren't looking good.
2. The Oval Office awaits. Trump, despite his willingness to do legal combat, now is in a totally different situation. He's no longer just another U.S. citizen.
At the urging, no doubt, of his lawyers and political advisers, Trump apparently decided it wouldn't do him or the country (but probably mostly him) any good to further testify under oath in these cases, either in court or via deposition, as either president-elect or sitting commander in chief.
3. Money. A $25 million settlement when the plaintiffs were seeking $40 million is not a bad deal. And Trump, as we all know is always looking for the best deal, be it regarding his taxes or business.
And there's a 3b here. What makes the settlement even better is that most of agreed payment amount will likely be tax deductible.
Deductible business expense: Tax attorney Robert Woods notes in his Forbes column that "most business settlements are fully tax deductible."
The only settlement amount that Trump arguably might not be able to write off, says Woods, is the $1 million in penalties that were part of the agreement.
Yes, penalties were part of the deal even though the settlement expressly says that Trump does not admit to any wrongdoing. Ah, legal double speak. You gotta love it. Or not. But I digress.
"But barring express non-deductibility commitments, many penalties can be deducted, too," writes Woods. In general, he says, fines and penalties paid to the government are not deductible, but some fines and penalties are considered remedial and deductible. That allows some flexibility.
And our next president is nothing if not flexible.
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