Matt Bissonnette grew up in a dinky flyspeck of a town off the Alaskan coast that you can’t get to without a boat or a plane. He ultimately escaped to join SEAL Team Six, the Navy’s most elite counterterrorism force. He took part in the 2009 mission to rescue Captain Mark Phillips from Somali pirates, a story which was told in the movie Captain Phillips. But that was just a warmup for his biggest mission: “Project Neptune Spear,” the 2011 raid that killed Osama Bin Laden.

In 2012, Bissonnette wrote a memoir called No Easy Day: The Firsthand Account of the Mission That Killed Osama Bin Laden. It earned him $6.7 million in royalties, which he planned to donate to the families of fallen SEALs. It also launched a lucrative second career as a public speaker. Unfortunately, Bissonnette broke the Pentagon rule requiring him to submit it for vetting before publishing. The day after the book landed on shelves, officials said it revealed classified information, a breach that could subject him to years in prison.

Last month, Bissonnette settled the dispute and agreed to pay back every dime of royalties, plus another $100,000 in speaking fees he earned before they approved the slides he uses in his presentations. Question: can he now deduct that payment from his taxes going forward?

Code Section 162(f) seems to shoot down any tax benefit. “No deduction shall be allowed . . . for any fine or similar penalty paid to a government for the violation of any law.” But what about payments made to settle a dispute before a fine or penalty is imposed? Treasury regulations state that payments made to settle that sort of potential liability aren’t deductible. But the regulations also state that compensatory damages do not qualify as fines or penalties.

So, that’s the $6.7 million question. Does Bissonnette’s payment serve to compensate the government for the damage his book caused? If so, then he gets his deduction. Or does it merely settle his potential liability for civil or criminal fines or penalties — in a way that benefits both the government and him by avoiding the time, expense, and potential public disclosures involved in a trial? In that case, no dice.

Bissonnette isn’t the only celebrity who may miss out on a fat tax deduction for a big gesture. Actress Amber Heard recently finalized her divorce from Johnny Depp with a $7 million lump sum payment, then announced she’s giving it all to charity. But she probably won’t get the deduction you’d expect. That’s because you can only deduct up to 50% of your adjusted gross income in any year (and carry any remaining balance forward five years). Ouch! Bet she didn’t see that coming!

Now, there are two ways Depp and Heard might be treating that $7 million. It could be a transfer between spouses, incident to the divorce. In that case, it’s nondeductible to Depp and tax-free to Heard. (Too bad her financial disclosures show she doesn’t have nearly enough income to take advantage of the full deduction.) Or it might be alimony, deductible to him and taxable to her. In that case, she’ll still owe tax on the 50% of her donation that she can’t deduct this year.

Here’s the lesson. Sometimes pricey things happen, and we console ourselves by saying “at least I get a tax deduction.” But that’s not always true, and it’s rare that value of the tax deduction is enough to compensate for the loss that creates it. So contact Ed Lloyd with Ed Lloyd & Associates before your next big transaction and make sure it serves you best!

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Ed Lloyd & Associates is considered as a one-stop solution provider to all your accounting needs. It is a Charlotte-based firm delivering accounting and tax planning services to the business and organizations. It has a team of some highly competent, qualified and experienced accountants that can help you advance the performance of your business. After cautiously assessing the requirements of your company, they would come up with a grand plan that would help you calculate costs incurred expertly. You may also rely upon the team Ed Lloyd CPA and Associates to get an expert advice on how to make sound financial investments.

The team at Ed Lloyd & Associates goes an extra mile to understand the requirements of your business. They are the leaders in the field of accounting and are resolved to pass on exceptional services each and every time. Happy business clients have regularly reported that they are the BEST service providers in the region.

Trusting your accounting needs with Ed Lloyd & Associates is one of the wisest decisions that you are going to make in your life. They will not only give your business a competitive edge, but will also outshine your competitors. There are numerous benefits of trusting your accounting needs with Ed Lloyd CPA. You can enhance the efficiency of your business with the help of Ed Lloyd CPA. Contact him now and boost up the performance of your business. They offer much more than it could be put into words. Get in touch with them now to know more.


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A lot of individuals and businesses around the world spend a lot on taxes, out of which a lot can be saved. This money literally goes out of your hand because of not knowing a certain handful of facts and rules. But thanks to the expert services put forward by Ed Lloyd & Associates PLLC  individuals and businesses can now save a lot on their yearly taxes. The firm put forwards a few of the best tips and tricks that will help you save a bulk of money from taxes, which can be invested to make further profit, or used in a number of different ways. Read More →