Washington (April 30, 2003) -- Legislation introduced by Sen. Chuck Grassley, chairman of the Committee on Finance, and Sen. Max Baucus, ranking member, would limit the amount of a government settlement which can be tax deductible. If approved, the legislation will affect the $1.4 billion conflict-of-interest settlement between the Securities and Exchange Commission and 10 Wall Street firms.
The bill makes clear that payments made to acknowledge actual or potential violations of any law are not tax-deductible. The bill denies a deduction for any such payment, including those where there is no admission of guilt or liability and those made to avoid further investigation or litigation. Payments made for real restitution to harmed people would remain tax-deductible.
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