[Bizcoach70]

Accounting/ Tax question.

An assisted living center is fined by the state in the amount of $13000 as the result of an audit which disclosed violations of the regulations for assisted living operations. The fine has been charged as an expense under the Legal and professional expense code. My question is is the expense deductible for federal tax purposes? Any help out there?

Thanks
Gary

[ma0641]

Section 162(f). Tax law excludes “any fine or similar penalty paid to a government (substitute "state") for the violation of any law” from the general rule allowing businesses to deduct their expenses. So local fines and penalties are deductible to the extent they don’t arise from a violation of any law. In this case, appears no because... "which disclosed violations of the regulations"

[Bizcoach70]

Thanks much for the reply. It seems reasonable and is what I was expecting.