Punitive Vs. Compensatory Determines if Payment is a Deductible Expense
Stephens V. Commissioner, 93 TC 108 showed that any payment labeled 'restitution' or 'punitive' is non-deductible as an expense. If the payments are labeled 'compensatory' then in order for the payment to be a deductible expense the question of whether the 'compensatory' expense was ordinary...