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Aug 18, 2014

First Circuit Rejects Talley and Allows a Business Expense Deduction for Settlement Payments Made Under the False Claims Act

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On August 13, 2014, the United States Circuit Court for the First Circuit rejected the United States’ request to deny Fresenius Medical Care Holdings Inc. from deducting a portion of a settlement payment to settle civil claims brought under the False Claims Act. Fresenius Medical Care Holdings, Inc. v. United States, 114 A.F.T.R. 2d 2014 - ___ (1st Cir. 2014) In affirming the Massachusetts federal judge’s decision to permit the tax deduction, the First Circuit disagreed with the Ninth Circuit’s decision in Talley Industries Inc. v. Commissioner, 116 F.3d 382 (9th Cir. 1997), and held, that a court may consider factors aside from the presence or absence of a tax agreement between the government and the settling party in determining the tax treatment of a False Claims Act civil settlement.

View full memo, First Circuit Rejects Talley and Allows a Business Expense Deduction for Settlement Payments Made Under the False Claims Act

Authors and Contributors

Laurence Bambino

Partner

Tax

+1 212 848 4213

+1 212 848 4213

New York