Deductions & credits

Adding one bit of detail to clarify matters a bit.

 

One might wonder why the company didn't file for bankruptcy and why ordinary employees had to take legal protection at personal level.

 

The answer is that the company had a branch office offshore where a lot of the creditors reside. US bankruptcy protection doesn't help there. Legal fees and settlements took place offshore. The D&O Insurance payment took place in the US, and hence is subject to US taxes.