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Abstract
The US Tax Code says that no deduction can be taken for any fine or similar penalty paid to a government for the violation of any law. For this purpose, a "fine" includes civil penalties as well as amounts paid in settlement of potential liability for any nondeductible fine or penalty. That may sound straightforward, but the regulations and case law make it less so. Such amounts are really more like damages or restitution, so they are allowable as deductions. In short, like so much else in the tax law, one cannot go by name alone. If tax advisers and businesspeople can be confused about these nuances, so too can lawyers and judges. That may help to explain the case of Fresenius Medical Care Holdings, Inc., decided by a District Court. The case concerns the tax deductibility of amounts paid to the government to resolve a Federal False Claims Act (FCA) case.