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Tax News: IRS releases rules on Settlement Deductibility

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On May 12, 2020 the IRS issued new rules providing guidance on the deductibility of settlements with governments. Prospective parties negotiating the entrance of a settlement now have guidance on what parts of a settlement may or may not be written off  for tax purposes.

The 2017 Tax Cuts and Jobs Act (the "Act") specified, under IRC Section 162(f), definitive amounts of settlements with governments and related entities that can be deducted. Parties may write off payments toward restitution, compliance, and remediation, but not penalties. The rules also create IRC Section 6050X, requiring governments or related entities to disclose the settlement amount to the IRS.

Please do not hesitate to contact our firm with any questions, Fazzio Law is in your corner.

The new guidance under proposed REG-104591-18. Link here: http://federalregister.gov/d/2020-08649

Category: Tax

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