Litigation & Arbitration,
Contracts
Aug. 10, 2022
Sexual harassment settlements and confidentiality
To be clear, the IRS is never bound by an allocation in a settlement agreement. Even so, as a practical matter the IRS pays attention to allocations and often respects them.
Robert W. Wood
Managing Partner
Wood LLP
333 Sacramento St
San Francisco , California 94111-3601
Phone: (415) 834-0113
Fax: (415) 789-4540
Email: wood@WoodLLP.com
Univ of Chicago Law School
Wood is a tax lawyer at Wood LLP, and often advises lawyers and litigants about tax issues.
Many people are surprised that for businesses, legal settlements are almost always tax deductible, as are legal fees. In fact, except for legal fees capitalized to an asset like a corporate acquisition or the purchase of real estate, legal fees are nearly universally deductible by businesses. Even legal fees related to clearly non-deductible conduct (such as a company negotiating with the government to pay a criminal fine) can be deducted. The criminal fine might not ...
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