On Monday, a federal judge for the Eastern District Court of Louisiana approved a settlement between BP and the United States for $20 billion to settle claims related to the 2010 oil spill in the Gulf of Mexico. Of that amount, $5.5 billion represented a Clean Water Act penalty, which is nondeductible under Internal Revenue Code sec. 162(f) (barring deductions for "any fine or similar penalty paid to a government for the violation of any law"). However, $15.3 billion of this settlement qualifies for a business tax deduction.
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