The Anti-Corruption Report

The definitive source of actionable intelligence covering anti-corruption laws around the globe

Articles By Topic

By Topic: Tax Deductibility

  • From Vol. 5 No.16 (Aug. 10, 2016)

    Managing Corruption Risk When Hiring and Training Foreign Officials and Their Relatives Overseas: Practical Compliance Guidance (Part Two of Two)

    More than a decade after the overseas anti-corruption enforcement boom began, it is clear that the U.S. government is looking to prosecute corruption that takes non-traditional forms. Providing internships, education, gifts, hospitality and entertainment to, or at the request of, government officials can all lead to anti-corruption troubles. For companies operating in the extractive industry, subject to local content laws that require them to provide such opportunities to the local workforce, compliance is key. In a two-part guest article series, Andrew Costa, the general counsel and assistant secretary of the Atlantic Methanol Companies, along with Jeremy Levin, a partner at Baker Botts, and his associate Louie Layrisson, discuss how to overcome overseas hiring and training challenges. The first article distilled insights from U.S. settlements regarding the government’s expectations for hiring practices and training programs. This second article provides guidance on mitigating risks associated with training foreign officials and hiring their relatives. See “Hiring Practices and FCPA Compliance in the Wake of the BNY Settlement (Part One of Two)” (Jan. 13, 2016); Part Two (Jan. 27, 2016).

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  • 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.9 (Apr. 29, 2015)

    Checklist of FCPA Issues to Consider Before and After Making a Charitable Donation

    Charitable donations can be effective guises for bribes, but can also be perfectly legitimate and benefit whole communities – in a sense, countering the corrosive impact of corruption.  Separating the altruistic payments from the problematic payments that improperly influence a foreign official can be challenging, especially when a foreign official has some connection to the charity.  The FCPA Report has compiled a non-exhaustive list of considerations to help companies formulate policies for smart charitable giving and to encourage good corporate citizenship while avoiding FCPA violations.  See also “Defining the Corruption Risks of Foreign Political Contributions,” The FCPA Report, Vol. 3, No. 18 (Sep. 10, 2014).

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  • From Vol. 4 No.8 (Apr. 15, 2015)

    $9.5 Million SEC FLIR Settlement Emphasizes Benefits of Self-Reporting and Importance of Internal Controls

    Employees often ask compliance officers about what is acceptable when entertaining or providing gifts to foreign officials.  How much is too much?  The FLIR fact pattern provides a clear case of “too much.”  Months after two of its employees had been sanctioned for the same behavior, FLIR Systems, Inc., an Oregon-based company that develops infrared technology, has resolved SEC charges that it took key officials of the Saudi Arabia Ministry of Interior on an extensive “world tour” and bought them luxury gifts.  “FLIR’s deficient financial controls failed to identify and stop the activities of employees who served as de facto travel agents for influential foreign officials to travel around the world on the company’s dime,” said Kara Brockmeyer, Chief of the SEC Enforcement Division’s FCPA Unit.  Despite the extravagant travel and gifts, FLIR did escape a DOJ enforcement action.  We discuss the details and takeaways from the case.  See also “A Guide to Preventing and Detecting Travel Agency Corruption (Part One of Three),” The FCPA Report, Vol. 3, No. 1 (Jan. 8, 2014); Part Two of Three, Vol. 3, No. 2 (Jan. 22, 2014); Part Three of Three, Vol. 3, No. 3 (Feb. 5, 2014).

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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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