Fox News May Score $213 Million Tax Write-Off From Dominion Settlement

The media outlet may be able to deduct nearly a third of the $787.5 million payout as the cost of doing business

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The eye-popping $787.5 million settlement agreement Fox Corp. reached with Dominion Voting Systems could come with a massive $213 million tax break for the conservative news organization.

Fox News may be able to write off as much as a third of the total, TheWrap has confirmed, thanks to tax laws that allow businesses to deduct the cost of doing business.

“That is not an unreasonable number,” John Lieberman, managing director of Perelson Weiner CPAs in New York, said, explaining that such a write-off is possible because tax law allows many “ordinary and necessary” legal costs to be written off. Lieberman added that the IRS may challenge the deductions, but “in theory those costs could be allocated.”

Lever News, which first reported the write-off potential and set the deduction at $213 million, noted that the IRS has ruled multiple times that settlements payments can be deducted.

The settlement reached Tuesday will result the largest-known defamation payout in U.S. history, after Fox agreed to the deal at the last minute. A jury was seated and lawyers were poised to begin their opening statements at trial when the judge announced the agreement made over lunch.

Dominion sued Fox for $1.6 billion in 2021, claiming the news outlet sold a “false story of election fraud” in order to hold onto viewers in disregard of the truth. In recent months, details of behind-the-scenes texts and emails released in the case revealed that hosts Tucker Carlson, Sean Hannity and others privately rejected Donald Trump’s claims of election fraud, but continued to support them on air for fear of losing its audience to rivals like Newsmax and OAN that were broadcasting the claims.

Fox confirmed the size of the settlement in a regulatory filing late Wednesday. The paperwork submitted to the Securities and Exchange Commission offers no new details on the agreement, but did repeat the company’s statement: “We acknowledge the Court’s rulings finding certain claims
about Dominion to be false.”

Brian Nick, Fox Corporation’s chief communications officer, confirmed the tax deductibility to the outlet, but said he could not vouch for the amount.

Exceptions to the rule exist for settlement payments related to sexual harassment or abuse cases, which means Fox wasn’t able to write off it $20 million settlement with Gretchen Carlson from 2016; the $50 million it paid out in 2017 related to accusations against former host Bill O’Reilly, contributor Charles Payne and host Eric Bolling; the $90 million settlement from 2017 with shareholders tied to the network’s sexual harassment scandal or its 2021 settlement with Britt McHenry.

Tax law also prohibits deductions for most fines and penalties paid to the government, but Fox’s settlement with private-equity backed Dominion does not include any such payments.

The media giant also still faces another suit related to its election fraud coverage. Voting machine maker Smartmatic sued Fox for $2.7 billion in 2021 in New York, a case that is still working its way through the system. As with the Dominion case, Fox has been accused to withholding material in discovery. No trial date has been set for the Smartmatic case.

Dominion has also sued MyPillow CEO Mike Lindell and Newsmax and OAN for defamation related to their election fraud claims. Reuters reported that shareholders are also contemplating a suit against Fox directors and executives.