News

Tax News: JP Morgan’s Madoff Settlement Not Tax Deductible

JP Morgan Chase’s deferred prosecution agreement contains an interesting twist that illustrates one of the basic rules of taxes.  JP Morgan Chase agreed to pay the government $1.7M for its part in the Bernie Madoff Ponzi scheme.  Generally, these types of litigation expenses and payouts are tax deductible.  However, under terms of the agreement the payment is not classified as a tax deductible, compensatory payment, but as a “penalty paid to the United States government.”  Penalties are not tax deductible.  As such, this agreement had some unforeseen tax consequences for JP Morgan Chase that affected its earnings.  The lesson for taxpayers is that penalties and fines are generally not tax deductible and it is important to have the proper classification of all payments.  Contact us at Hone Maxwell LLP today if you have questions regarding your expenses and if they are tax deductible.   For more tax updates and the latest news you can follow us on twitter @HMLLPTax or facebook at www.facebook.com/HoneMaxwellLLP.

Disclaimer: Hone Maxwell LLP articles and blogs are not intended as legal advice. Additional facts, facts specific to your situation or future developments may affect subjects contained herein. Seek the advice of an attorney before acting or relying upon any information herein.

Latest Post

SAN FRANCISCO

870 Market St., Suite 588
San Francisco, CA 94102
415.765.1754

SAN DIEGO 

3465 Camino Del Rio South, Suite 400
San Diego, CA 92108
619.980.4476

IRVINE

4 Venture, Suite 320
Irvine, CA 92618
949.838.7807

TIJUANA

Centro Corporativo Dayco
Blvd. General Gustavo Salinas #11050
Suite 602, Col. Aviacion
22014 Tijuana, B.C., Mexico
+52 (664) 504 6415

Newsletter Signup

Stay updated on the latest tax laws.