Headline ‘O the Day: Tax breaks could soften blow of JPMorgan deal
by digby
JPMorgan Chase has struck a tentative deal with the Justice Department to pay a record $13 billion over dodgy mortgage products — but the biggest U.S. bank may be able to slash that bill by paying Uncle Sam less in taxes.
Details of the pact are now being finalized, but it is expected to include $9 billion paid to the government and $4 billion in relief for wronged customers.
The silver lining for JPMorgan: The bank will likely be able to write off a good chunk of those funds by calling them business expenses, tax experts said.
Section 162(f) of the tax code bars deductions for fines and penalties paid to the government, but JPMorgan might be able to negotiate an agreement to classify the payments as something else. Those payments labeled compensatory or for restitution are more likely to be deductible.
“These are big numbers,” said Alan Feld, a law professor at Boston University. “I’m not sure that I as a taxpayer am so happy about helping JPMorgan to pay.”
Huh? People didn’t think JP Morgan was going to lose all that money, did they? How silly.
One might make the argument that this is one of the reasons why jail time is a better form of punishment. But that would be silly too.
.