You remember the headlines…right?
$25 Billion Attorney General Foreclosure Settlement
$10 Billion Federal Reserve Foreclosure Settlement
And of course, no one reported on the fact that homeowners who “benefit” from these sweetheart deals between the banks and the governments they own will be receiving IRS Form 1099-c forms and that many of these homeowners will now have real tax liabilities traded in for phantom debt that was not collectible. On top of that, those headline grabbing numbers are just delusions…everyone knows that the banks will pay nothing near those numbers….(much of the losses will in fact be borne by the investors in those mortgage loans)…but here’s another big swift kick in the teeth….
THE BANKS GET TO WRITE THEIR FORECLOSURE SETTLEMENTS OFF AS BUSINESS EXPENSES!
Awesome deal…huh? First, the banks engage in insurance fraud, ripping taxpayers and the federal government off. Next, when they get caught, they conspire and agree to give just a few pennies back…..but on top of that…and this is where it gets real sick…..the penalties they pay will be used to reduce the corporation’s tax burden!
In this sick nation that we all subside in, the perverse becomes all too real….from the New York Times:
Senator Charles Grassley has been critical of favorable tax treatment of settlements.
But there’s more than meets the eye to the big legal settlements you’ve been reading about involving some of the nation’s biggest banks.
Actually, there’s less than meets the eye.
The dollar signs are big, but they aren’t as big as they look, at least for the banks. That’s because some or all of these payments will probably be tax-deductible. The banks can claim them as business expenses. Taxpayers, therefore, will likely lighten the banks’ loads.
new york times