In Comically Evil Twist, Fox Will Receive a Huge Tax Break From Its Dominion Settlement
In the run up to Tuesday’s historic defamation trial against Fox News, it actually looked like there was a chance the democracy-killing organization might seriously pay for the lies it told about the 2020 election, both from a financial and reputational standpoint. Obviously, that did not happen thanks to an eleventh hour settlement that will see Rupert Murdoch’s company writing a check for $787.5 million—less than half of the $1.6 billion in damages Dominion had asked for. And that’s just one of the myriad ways things are working out in Fox’s favor!
The Lever reports that thanks to an “arcane line” in the US tax code—which allows companies to write off “ordinary and necessary” business expenses—Fox could be able to deduct the nine-figure settlement from its income taxes and receive of tax break of up to $213 million. (For those of you doing the math at home, that’s nearly one third of the amount of money Fox has agreed to pay Dominion.) “If your business model is to tell lies so that you’ll get viewers and have lots of advertising revenues, then, odious though this business model may be, the tax system’s job is to tax you on the profits that you actually make from it,” Daniel Shaviro, a professor of tax law at NYU, told the outlet. “And those profits are indeed reduced when you are successfully sued by the victims of your malicious falsehoods.” Brian Nick, chief communications officer for the Fox Corporation, told the Lever that he could “confirm tax deductibility but not the amount.”)
If you’re wondering at this time if the many millions Fox paid out to settle sexual harassment lawsuits against various former executives and employees were also written off, the answer is likely no; as the Lever notes, there is an exception to the rule for settlement payments involving sexual harassment or abuse that include nondisclosure agreements.
Anyway back to Fox and its incredible turn of luck re: being held responsible for the lies it fed its audience day after day. While the write-off is obviously nice, the company would be more than fine even if it were not eligible for one.
https://www.vanityfair.com/news/2023/04/fox-news-dominion-settlement-tax-break
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