WSJ: J.P. Morgan's $5.1 Billion Settlement Is Tax Deductible

Wall Street Journal, J.P. Morgan's $5.1 Billion Settlement Is Tax Deductible: Bank Could Save Nearly $1.5 Billion in Taxes:

J.P. Morgan Chase & Co.'s $5.1 billion settlement with Fannie Mae and Freddie Mac will be entirely tax deductible for the bank, according to a person familiar with the situation—effectively lessening the bank's true payout and shifting part of the settlement's cost to taxpayers.

The ability to deduct the cost of the settlement could save J.P. Morgan nearly $1.5 billion in taxes, based on the bank's 29.1% effective tax rate for the first half of 2013. It isn't known whether J.P. Morgan will actually go ahead and take the deduction. ...

Tax experts say it isn't surprising that a big chunk of the settlement would be deductible. "This is exactly the kind of thing everybody deducts. That's the way the tax system works," said Robert W. Wood, a tax attorney with Wood LLP in San Francisco.

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