Some observations to add to National Review’s house editorial, “Stop Trump’s Slush-Fund Boondoggle.”
The settlement agreement between Donald Trump and the IRS states (in section IV.A):
The corpus of The Anti-Weaponization Fund’s funding [i.e., the $1.776 billion dollars set forth in Acting Attorney General Todd Blanche’s order] does not represent the value of any current claim by Plaintiffs [Donald Trump et al.], but rather is based on the projected valuation of future claimants’ claims, and accordingly the corpus of The Anti-Weaponization Fund’s funding is not taxable income as to plaintiffs, who receive no economic benefit from this Settlement Agreement.
I find this sentence baffling in two respects:
1. The settlement’s declaration that the settlement amount “does not represent the value of any current claim” by Trump and the other Trump plaintiffs (Donald Trump Jr., Eric Trump, and the Trump Organization) sure seems like an admission that the settlement is collusive and in bad faith.
2. Why does the settlement assert that the funding amount “is not taxable income as to plaintiffs”?
I’m no tax expert, but it’s not at all clear to me that this assertion is correct. The ordinary rule, as I understand it (and I’m happy to be corrected), is that you don’t avoid having a settlement payment treated as taxable income by redirecting it to a third party. Nor is it evident why basing the funding on something other than the value of plaintiffs’ claim would affect its taxability. (The word “accordingly” marks the passage as a non sequitur.)
The evident purpose of including this provision is to attempt to foreclose the IRS from treating the funding amount as taxable, even if established principles of law render it taxable. That, I gather, is why the settlement agreement bears not only the signature of the Associate Attorney General (which would suffice to bind the United States, if the agreement is otherwise lawful) but also the signature of Frank J. Bisignano in his capacity as the IRS’s chief executive officer. Whether this seemingly collusive agreement would bind a later Administration on this point is a different matter.