Compensatory Damages Can Be Tax Deductible

[Pacun]

Compensatory Damages Can Be Tax Deductible

A 2010 court decision that favored the IRS over a corporate taxpayer provides useful insights for other companies making restitution payments to the government.

Robert Willens - CFO.com | US

July 19, 2010

On January 18, 2000, Fresenius Medical Care Holdings Inc. and the United States signed a "Global Agreement" resolving a series of suits against the company on claims of Medicare fraud. The agreement required Fresenius to pay the astonishing sum of $486,334,232 to the United States — $101,186,898 under the criminal agreements and $385,147,334 under the civil agreements. The civil agreements provided that "nothing in this Agreement constitutes an agreement by the United States concerning the characterization of the amounts paid...(for tax purposes)."

In its 2000 and 2001 tax returns, Fresenius claimed deductions for the entire civil payment. The IRS maintains that payments totaling $126,796,262 are not deductible. Fresenius moved for summary judgment but the court denied its motion. The issue, therefore, will have to be decided "on the

Full report at http://www.cfo.com/article.cfm/14511999/?f=rsspage

[jainen]

>>making restitution payments<<

Does this mean I can deduct the add-on portions of my DUI fine that cover booking fees, police enforcement and administration, road repair, and court costs, which is about 80% of the total? Assuming the swill had a documented business purpose, of course!

[jainen]

>>deduct the add-on portions of my DUI fine<<

Oh, never mind. I'll just bury it in professional memberships and CPE like before.