Tuesday, October 28, 2008


And you think you have deduction problems.
On Monday, the U.S. Tax Court rejected WellPoint Inc.'s bid to claim more than $113 million in deductions on the insurance company's 1999 and 2000 tax returns. WellPoint had paid out the money in a settlement with Kentucky, Ohio and Connecticut after those states sued. Those original lawsuits arose following WellPoint's merger with the Blue Cross and Blue Shield system.
In Tax Court, WellPoint argued that the settlement payment was an ordinary and necessary cost of doing business, and hence deductible. The government argued they were capital expenditures and not deductible. Insert boring legal reasoning here.
Judge Diane Kroupa agreed with the IRS on this one, http://www.ustaxcourt.gov/InOpHistoric/Wellpoint.TCM.WPD.pdf
and the resulting tax deficiency appears to be over $51 million, which is enough to make anyone sick.

1 comment:

Anonymous said...

Once again Judge Kroupa sides with her freinds of the IRS. Did you know she worked for the IRS office of Cheif Council prior to Tax Court Judge? The same IRS office responsible for representing the Commissioner of Internal Revenue. Can you say BIAS! Bet you did'nt know you've lost before trial begins!!! check this link: http://www.mnbar.org/sections/tax-law/JudgesConferencePix2006.asp