A deduction is allowed if initiated for business purposes by a business. The deduction is based on what the settlement payment was actually for. An example that would not qualify would be settlements for discrimination. However this is not the reason for this particular situation. The reference provide by @DaveF1006 (IRS Notice 201412002), as well as IRS Publication 334, will provide additional guidance. If the settlement paid for a capital item or a necessary, ordinary business expense will depend on how it is deducted.
Personal legal settlements, under the Tax Cuts and Jobs Act (TCJA) provides no deduction (2018-2025). No change has been initiated at this time.
@NYCMIKE1234
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