Credit: Andrey_Popov/Shutterstock When an Expense is Considered 'Paid': 'Gage v. Commissioner'
A discussion of the recent Tax Court case, Gage v. Commissioner, which addressed (1) the year in which a payment in settlement of claims made against the taxpayers by the federal government was considered to have been made for tax purposes, and (2) whether it was reasonable for the taxpayers to believe that the payment was not a "fine or similar penalty" nondeductible under IRC section 162(f).
June 14, 2023 at 12:00 PM
8 minute read
The deductibility of payments made in settlement of claims is often contested by the Internal Revenue Service. In Gage v. Commissioner (TC Memo 2023-47), the taxpayers wished to deduct an amount payable to the federal government to resolve claims attributable to their guarantee of obligations collateral to a loan insured by the Department of Housing and Urban Development (HUD).
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