Related: I believe you can take offset such a settlement from profits to reduce taxes. Never really understood the rationale for this. Seems pretty arbitrary and another example of how corporations are often favored over humans.
Imagine if you earned $1000 from activity X, paying $200 tax on it. Later X is found to be illegitimate and you have to pay $1000 damages and $500 punitive damages. Except because of the tax you have net lost $700 rather than the $500 punitive damages.
Put in another term, it would be like paying tax on money you never had.
What's to understand? When a company pays your salary or the rent for your office that also means less profit and therefore less taxes. But probably the company would be glad to pay less in salaries and rents even if that meant paying higher taxes.
