Tax News: Toyota’s Settlement for the Sudden Acceleration Case is Not Tax Deductible
Similar to the settlement with JP Morgan over the Madoff ponzi scheme, once again the Department of Justice has announced a settlement under a deferred prosecution agreement will not be tax deductible. This time it is Toyota that will not be able to have the taxpayers help fund its problems. Toyota was under investigation for misleading acts related to the accidental acceleration problems. The settlement with the Department of Justice contained a provision that made Toyota specifically state they would not try to receive any tax benefit or deduction from the imposed settlement payment. With a settlement payment of $1.2B and a tax rate of 35%, absent this agreement Toyota may have been able to push over $400M of the payment back on the government. Many taxpayers are happy with these recent events as it seems the government is taking an approach that it is not going to subsidize bad acts and illegal behavior.