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New Restrictions on Deductibility of Settlement Payments

August 14, 2018, Covington Alert

New restrictions on the deductibility of certain payments will require companies facing government investigations to pay close attention to the tax treatment of any settlement or court judgment, and to address this treatment in their negotiations with regulatory agencies. There is a risk under new tax rules that the amount paid to resolve these disputes may be nondeductible, substantially increasing the economic cost of the resolution.

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