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Final IRC 162(f) and 6050X Regulations: Tax Treatment of Settlements and Judgments, Requirements, Fines, Penalties

Recording of a 90-minute premium CLE/CPE video webinar with Q&A

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Conducted on Wednesday, April 28, 2021

Recorded event now available

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This CLE/CPE course will provide tax professionals guidance on key provisions of recently issued final IRC 162(f) and 6050X regulations. The panel will discuss applying the final regulations to fines, penalties, and other amounts, along with the requirements and exceptions. The panel will also discuss the impact of the new regulations and guidance on settlement agreements and payments.

Description

On Jan. 12, 2021, the IRS issued final regulations on Section 162(f) and 6050X, as modified by the 2017 tax legislation, concerning the deduction of certain fines, penalties, and other amounts. Tax professionals must be aware of the implications, reporting requirements, exceptions, and other nuances of the new regulations.

The final regulations include several changes from the proposed regulations and finalizing provisions for governmental authorities, and provide taxpayers with guidance in negotiating and drafting settlement agreements. The regulations also address Section 6050X, which imposes reporting obligations on certain governmental authorities.

Before the 2017 tax reform, fines and penalties paid in connection with a violation of law were not deductible, except for payments made as compensatory damages, including single damages or remediation costs. Taxpayers are now prohibited from deducting any amounts paid or incurred to, or at the direction of, a government, governmental entity, or certain nongovernmental entities in response to a violation of law or potential violation of law, with few exceptions.

Listen as our panel discusses the tax treatment of settlements and judgments, implications of final IRC 162(f) and 6050X regulations, and offers strategies for negotiating and drafting settlement agreements in light of the new regulations.

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Outline

  1. Overview of the tax treatment of settlements and judgment
  2. Recent case rulings
  3. IRS Final 162(f) and 6050X regulations
    1. Requirements
    2. Exceptions
    3. Reporting
  4. Key considerations in negotiating settlement agreements

Benefits

The panel will review these and other key issues:

  • What are the applicable rules regarding the tax treatment of settlements and judgments?
  • What is the impact of the recent final IRC 162(f) and 6050X regulations?
  • What are the requirements and exceptions under the new regulations?
  • What are the reporting and tax compliance challenges?
  • What are the key considerations for negotiating and drafting settlement agreements?

Faculty

Gagnon, Richard
Richard (Jake) Gagnon
Counsel
Shearman & Sterling

Mr. Gagnon represents U.S. and international clients in audits and investigations before the Internal Revenue Service...  |  Read More

Lowther, Todd
Todd Lowther
Partner
Shearman & Sterling

Mr. Lowther provides tax advice to clients on mergers and acquisitions, oil and gas transactions, and corporate and...  |  Read More

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Strafford will process CLE credit for one person on each recording. CPE credit is not available on recordings. All formats include course handouts.

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