Fox can claim tax writeoff for defamation settlement

By | April 20, 2023

The Lever reports:

Fox’s massive settlement with private equity-backed voting machine company Dominion Voting Systems didn’t just spare the conservative news organization from a lengthy public defamation trial or a full public reckoning for its election lies — it could also mean a tax break as large as $213 million, according to a Lever review.

On Tuesday, Fox News and its parent company Fox Corporation agreed to pay a $787 million settlement to Dominion, the largest-known media defamation payout in U.S. history, concluding two years of litigation over the news network’s false claims that the 2020 election was rigged.

Thanks to an arcane line in the tax code, Fox can deduct that settlement payment from its income taxes, according to a company spokesperson and tax experts consulted by The Lever. That’s because federal law allows taxpayers to write off many legal costs, providing that they are “ordinary and necessary” business expenses. The IRS has repeatedly affirmed that for major corporations, paying out settlements is just part of the cost of doing business. [Continue reading…]