Physician’s Restitution for Insurance Fraud

An IRS private letter ruling concludes that restitution payments made by a physician to insurance companies to settle claims for insurance fraud are not deductible as trade or business losses under IRC Sec. 165(c)(1) , but are deductible as losses incurred in a transaction entered into for profit under IRC Sec. 165(c)(2) . [ Section 165(c)(2) deductions are claimed as miscellaneous itemized deductions subject to the 2%-of-AGI floor.] In reaching this conclusion, the IRS cited Rev. Rul. 65-254 (1965-2 CB 50) and Rev. Rul. 82-74 (1982-1 CB 110) for the proposition that payments in the nature of restitution (i.e., intended to compensate the victim rather than punish the perpetrator) are deductible under IRC Sec. 165(c)(2) . Ltr. Rul. 200834016 .

Have questions? I’m here to help.

This field is for validation purposes and should be left unchanged.
This field is for validation purposes and should be left unchanged.
Categories
Accounting and Tax Services Litigation Support Managed Care Consulting Managed Care Contract Negotiations Medical Practice and Healthcare Entity Valuation Medical Practice Assessment Medical Practice Brokerage Medical Practice Embezzlement Consulting Medical Practice Management Medical Practice Merger Advice Medical Strategic Planning Newsletter Personal Financial Planning Oversight Physician Compensation Models Physician Compliance Physician Financial Management Services Retirement Uncategorized
About Reed Tinsley, CPA

As a top advisor to physicians, I help increase practice profits by delivering hands-on, expert medical accounting/tax support, practice counsel, and revenue-building strategies. Read More >

Reed Tinsley, CPA