Pharma and Life Sciences Tax News, Vol. 12, No. 9

June 2013
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Pharma and Life Sciences Tax News, Vol. 12, No. 9

At a glance

On May 9, 2013, in Fresenius Medical Care Holdings, Inc. v. U.S., 2013 WL 1946216 (D. Mass), the United States District Court for the District of Massachusetts ruled in favor of Fresenius Medical Care Holdings, Inc. (the “Taxpayer”) affirming a prior jury verdict that $95,000,000 of a $126,796,262 civil settlement payment was deductible for Federal income tax purposes under Section 162(a).

Portion of multiple damages payment treated as deductible by U.S. District Court in False Claims Act settlement - June 17, 2013

The IRS had argued the entire $126 million was a fine or similar penalty and non-deductible for Federal income tax purposes under Section 162(f). As discussed below, the United States District Court ruled in favor of the Taxpayer, supporting the position that a large portion of civil settlement payments may be deductible for Federal income tax purposes.