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Can I deduct my restitution payments on my taxes

? I was convicted of...
Can I deduct my restitution payments on my taxes ? I was convicted of a felony in federal court and I have to pay restitution.
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Answered in 17 minutes by:
10/15/2007
RD
RD, Certified Public Accountant (CPA)
Category: Tax
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What is the conviction for?
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Customer reply replied 10 years ago
Three counts of wire fraud. It was a business investment that the feds said I misspent the money. Amount of restitution is $200,000.

Penalties and fines are generally not tax deductible. However restitution payments or disgorgement of profits have been deductible expenses in settlements with state and federal regulators. So as long as the Court judgement is clear that the payment is in the nature of restitution and not fines and penalties, these payments would be deductible in the ordinary course of business or as capital expenditure if capital in nature.

Link to one of the case law on this issue-

http://64.233.167.104/search?q=cache:5tLfQAEjrW0J:woodporter.com/pdf/TN032706.pdf+Restitution+payment+business+expense+IRS&hl=en&ct=clnk&cd=9&gl=us

 

http://caselaw.lp.findlaw.com/cgi-bin/getcase.pl?court=6th&navby=case&no=960016p

 

Let me know if you have any question. Bonus and Feedback will be highly appreciated!!!

 

Please note: This advice is provided with the understanding that all the relevant facts have been provided by you. Any change in facts might affect the advice given and hence may not be relied on in such cases. Nothing contained in this reply was intended or written to be used, can be used by any taxpayer, or may be relied upon or used by any taxpayer for the purposes of avoiding penalties that may be imposed on the taxpayer under the Internal Revenue Code of 1986, as amended.

 

RD
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