In most places, a legal settlement is considered a tax deductible loss. At a certain scale it will likely cost the company nothing, but these kinds of cases often trigger speculators grabbing discount stock from panicking amateurs. lol We still have no idea what they sell, so avoided exposure to their antics... =3

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tpmoney 6 days ago | parent [-]

But that isn't how tax deductions work. Since taxes are always a fraction of income, a deduction can never save you more money than you already paid out to get the deduction in the first place. If you have a 10% tax rate, your options are:

A) Make 100M, pay 10M in taxes

B) Make 100M, pay 10M in lawsuit settlements, pay 9M in taxes

You come out ahead every time by not paying the settlement in the first place.

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Joel_Mckay 6 days ago | parent [-]

You may be confused, but a business loss deduction usually reduces a taxable income. In general, most systems only require the cost/loss was incurred during gaining or producing income from a business or property.

For a significant sum, we should assume their team consulted a specialist firm on the subject at their location. People don't often YOLO this stuff at that scale, and businesses don't always settle every time they get shaken down for cash... some go to war, as it can be cheaper to sandbag/delay till opponents go bankrupt.

Have a great day. =3

	▲	tpmoney 6 days ago \| parent [-]
		> You may be confused, but a business loss deduction usually reduces a taxable income. Yes, I know, which is why in option B the taxes required was $9M instead of $10M. The 10k payment reduced taxable income from $100M to $90M. Business taxes are notoriously complex, but I am aware of no IRS rules that would allow a 10M legal settlement to reduce the taxes owed by >= $10M. If you believe I remain confused, please by all means provide an example scenario and/or citations to the relevant tax statutes.