Maybe I’m cursed by profession but I personally have no problem with the artful (from a tax standpoint) structuring of a civil settlement in such a way that maximizes related tax deductions thus minimizing future tax liability. Other folks are not so happy however:
The reason cited in the story is that BP admitted to criminal charges, which ironically, can actually enhance the probability that certain spill related professional fees like the lawyering can be deducted under IRC Section 162(a). I can’t talk specifics from my own tax practice but here is an interesting blurb reprinted from the M&A Tax Report circa 2002:
It is a fairly complex area but when it comes to criminal racketeering, the answer is usually yes, especially if the defendant is convicted. Accardo v. Commissioner of Internal Revenue, 942 F.2d 444 (7th Cir. 1991) is an interesting case to learn where the IRS and the 7th Circuit made the cut in denying an attorney fees deduction for the successful defense of a criminal RICO prosecution:
This is where the paradox noted above creeps into the picture. The Commissioner (Br. 16) concedes that those defendants who were found guilty as a result of the same RICO prosecution could properly claim a deduction for legal fees under Section 162(a) “as expenses paid or incurred * * * in carrying on any trade or business,” because they were found to be engaged in the racketeering business. Section 162(a) does not draw any distinction between legitimate and illegitimate business enterprises. But since the jury acquitted taxpayer of involvement in the racketeering business, he could not claim a Section 162(a) deduction….
I imagine E&Y was consulted as the settlement was being drafted, in fact I’d rate it that as a certainty based on the after the fact chatter from the public interest groups.
I think I see a nugget in David’s story that tells me he is signaling his knowledge or at least is on the right track. I like that.
The person responsible for the above reads this site, sometimes even sharing some insight. I have not covered the BP settlement litigation beyond the very early days. Luckily for everyone, Jason over at American Zombie has tackled this immensely complex subject and has done a very fine job with it, better than the New York Times and certainly far better than the gasbags at 60 minutes. Here are two very recent must reads from AZ:
If State Farm is the true pinnacle of hard nosed corporate litigants then BP does not stand a chance here with the peanut gallery alone. You gotta love the PSC for being wise enough to see the genius in an idea from a member of the public that happens understands Federal Court Practice like few others. Now take that lap.
I mention this because of the Land Trust Board members that are reaching out in response to the criticisms directed to the organization on these pages. The power of the medium lies not in the ability to ostracize, though I suspect those on the receiving end of the criticisms would beg to differ. That said, it is the ability to help guide decision makers as a reflection of public opinion and a wealth of community expertise is where the true power of the Internet medium is derived.
“The six council members knew nothing of the agreement until after the grant was received,” said city attorney W. Fred Hornsby III. The council could have chosen not to pay Maxwell-Walker, he said, but agreed to give the firm the standard 6 percent finder’s fee of $180,000 for the grant.
The payment to Maxwell-Walker was not discussed in an open council meeting, only in executive session, Janus said.
Rather than putting a resolution for payment on the budget, it was added to the Dec. 20, 2011, docket of claims with the city’s other bills.
I’ll let all you newbies out there in on a little secret. Slabbed was one of a select group of local blogs everyone in the National Media read during the oil spill, often times ripping off our material without any attribution. My own perspective is it is hard to respect anyone in the media that does not have the common decency to attribute where they got their story leads which is why I have such little respect for the national media.
So what in the heck does this all have to do with Buddy Caldwell and the Huff Po? Mainly because on the “Around the Web” widget at the bottom of the story that I linked above, Slabbed’s previous coverage of Louisiana Attorney General Buddy Caldwell is linked at the #2 slot right below Bloomberg. I personally think we should be #1. 😉
Folks in today’s update of the trial in Judge Feldman’s courtroom Bull Durham was on the stand last week and me thinks the pressure is getting to Costner, who could not read his testimony from a script like he did before Congress back in 2010. Here are a few snippets from 2 AP stories filed on the topic the the first of which detailed Bull’s testimony from last Thursday:
Actor Kevin Costner says he was heartbroken as he watched millions of gallons of oil spew into the Gulf of Mexico in 2010 and that he headed to New Orleans to see whether cleanup devices he helped develop could aid the recovery effort. Costner, who has been sued in a multimillion-dollar business dispute involving the devices, told jurors he was nervous. “My name is at stake,” he said.
Indeed it is as we’d all be disappointed if Bull is perceived as anything other than full of BS because that is all we saw back in 2010 when he showed up in this area like a fly on shit after the oil spill peddling useless centrifuge technology as a cure all for the Macondo well blowout. Bull has an interesting self concept of his contribution to combating the spill:
“I’m not just a celebrity,” Costner said during testimony. “I’m not just a person who opens doors.”
In a June 8 text from Smith to Ted Skokos, an investor who ultimately bought out Contogorous’ shares in OTS, Smith wrote: “We had an amazing meeting with BP. We r on line. I have a buyout agreement from the partner we want out being drafted today.”
On June 10, Metairie, La., attorney Daniel Grigsby drafted the contract between BP and OTS for 32 centrifuges.
Smith testified that the order from BP for centrifuges was still “conditional,” as of June 10. The next day, June 11, Contogorous effectively sold his shares in OTS in a document Grigsby drafted.
Today I’ll highlight some of the main stream media reporting on the trial and I am going to draw a sharp line and differentiate the reporting. First up though we need to examine what got everyone into Judge Feldman’s courtroom, one that is very plaintiff unfriendly if said plaintiff is an individual suing an insurance company.
Gullibility is a failure of social intelligence in which a person is easily tricked or manipulated into an ill-advised course of action. It is closely related to credulity, which is the tendency to believe unlikely propositions that are unsupported by evidence.
Classes of people especially vulnerable to exploitation due to gullibility include children, the elderly, and the developmentally disabled
I was tempted to sign into my wiki account and add the words “and National Media” because they made this lawsuit in a way back in 2010 by giving Costner huge amounts of free publicity when he showed up on the Gulf Coast like a fly circling a fresh cow pie after the oil spill. Notice I used the term “publicity” instead of “news” because the reporting was uncritical and 100% derived from controlled tests of Costner’s centrifuge technology, which were not previously commercially viable and was not used to any effect in the 2010 oil spill.