The FCPA Report

The definitive source of actionable intelligence covering the Foreign Corrupt Practices Act

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By Topic: Tax

  • From Vol. 5 No.13 (Jun. 29, 2016)

    What Does the New IRS Position Paper on Disgorgement Mean for FCPA Settlements?

    This spring, the IRS announced that certain disgorgement payments made to the SEC for FCPA violations were not deductible expenses under Internal Revenue Code Section 162(f). The IRS did, however, leave open the possibility that in some other factual scenarios, FCPA disgorgement penalties could serve purposes that would allow them to qualify for deductibility. Shearman and Sterling partner Lawrence M. Hill, who specializes in tax controversies, discusses the implications of the IRS position paper in a guest article. See “Are Legal Settlements Tax Deductible? (Part One of Two)” (Nov. 19, 2014); “Ten Strategies to Maximize the Tax Deductibility of Settlements (Part Two of Two)” (Dec. 3, 2014).

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  • From Vol. 4 No.18 (Sep. 9, 2015)

    Mayer Brown Attorneys Discuss Tax Court Corruption Scandal in Brazil

    Despite recent initiatives to curb bribery, corruption remains endemic in Brazil.  The evolving Petrobras scandal exposed extensive corruption in the petroleum industry and now another multi-billion dollar corruption scandal has come to light involving one of Brazil’s tax tribunals.  Taxpayer intermediaries appear to have bribed judges on Brazil’s Administrative Council of Tax Appeals (known as CARF) to secure favorable outcomes.  Dozens of CARF decisions from 2005 through 2013 are being investigated.  A recent program presented by Mayer Brown offered valuable insights into the corruption scheme, the pending investigations and potential liabilities for participants in the scheme under both Brazil’s Clean Companies Act and the FCPA.  The program featured Mayer Brown partner Kelly Kramer, who moderated the discussion, and Salim J. Saud Neto and Eduardo Telles, partners at Tauil & Chequer Advogados, Mayer Brown’s Brazil affiliate.  This article summarizes the key takeaways from the program.  See also “Experts on Brazilian Law Explain the Latest Fallout from the Petrobras Scandal,” The FCPA Report, Vol. 4, No. 11 (May 27, 2015); and “Operation Car Wash: Examining the History and Consequences of the Petrobras Scandal,” The FCPA Report, Vol. 4, No. 6 (Mar. 18, 2015).

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  • From Vol. 3 No.24 (Dec. 3, 2014)

    Ten Strategies to Maximize the Tax Deductibility of Settlements (Part Two of Two)

    Tax structuring is a concept more often associated with business transactions than with legal settlements.  But in a recent presentation, Shearman & Sterling partner Lawrence M. Hill highlighted the fundamental role of tax in the net economics of legal settlements.  Informed tax structuring can dramatically reduce the dollars that go out the door in a legal settlement, and tax counsel can powerfully affect the economics of settlements.  In his presentation, Hill discussed ten specific strategies that companies can use to maximize the tax deductibility of legal settlements.  This article – the second in a two-part series – describes those ten strategies.  The first article in this series offered a comprehensive overview of the law governing taxation of settlements.

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  • From Vol. 3 No.23 (Nov. 19, 2014)

    Are Legal Settlements Tax Deductible?  (Part One of Two)

    Lawyers negotiating significant settlements while ignoring tax considerations are taking a very expensive risk.  During litigation, “what’s at the forefront is minimizing your liability, particularly if it’s criminal liability,” Lawrence M. Hill said during a recent presentation on the tax treatment of damages at Shearman & Sterling’s New York office, where he is a partner.  “But the numbers are big enough, tax-wise, that it’s not something you should just be thinking about after the fact,” he warned.  In a two-part series, The FCPA Report summarizes Hill’s presentation on this critical issue.  This, the first article in the series, examines and explains the law governing tax deductions of settlements and the different treatments of various types of settlements.  In the second article in the series, Hill provides specific guidance on taxation of damages in practice and how a company can make its case that a settlement should be deductible.

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