Sign Of The Times

The U.S. Tax Court ruled that a New York printing company could deduct kickbacks to purchasing agents.

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We all know crime doesn't pay, but sometimes it's at least tax-deductible. The U.S. Tax Court recently ruled that a New York City printing company could legitimately deduct some $800,000 in kickbacks to big-company purchasing agents. (The company did plea bargain to separate criminal charges of filing false tax returns.) The judge cited a New York State law that holds that the paying of extortion money isn't illegal; he decided that threatening a small company with the loss of major customers amounted to extortion. But the judge also pointed out that kickbacks had been common enough in the New York printing industry to constitute "ordinary and necessary" (and thus deductible) business expenses.

-- Martha E. Mangelsdorf

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