Daily Tax Report ®

BTAX OnPoint: Final Rules on Deductibility of Fines, Penalties

Jan. 13, 2021, 9:29 PM

Final rules on the 2017 tax law’s changes to the tax treatment of fines and penalties largely address commenters’ concerns regarding deduction disallowance rules.

The final rules (T.D. 9946; 1545-BO67), released Jan. 12, also provide clarity on questions left unanswered by the May proposed regulations (REG-104591-18).

The tax overhaul expanded the scope of the Section 162(f) disallowance to deny a deduction of any amount paid or incurred to, or at the direction of, a government or governmental entity in relation to the violation of any law, or the investigation or inquiry by such government...

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