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DOJ Allows Bank of America to Deduct $12 Billion of $17 Billion Settlement

Posted on August 23rd, 2014 at 10:55 by John Sinteur in category: Robber Barons -- Write a comment

[Quote]:

BOA Logo (2014)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.

So there you go – fines are just a business expense.

  1. Sharing the proceeds of organized crime…

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