The news headlines provide yet another classroom example of the ways folks in the real world plan around the limitations on business deductions for payments of fines and penalties.  Under § 162(f), no deduction is allowed "for any fine or similar penalty paid to a government for the violation of any law." In its $850 million settlement (see here and here) of bid-rigging charges brought by New York Attorney General Eliot Spitzer, Marsh & McLennan structured the payment as restitution to Marsh & McLennan clients, rather than as a fine or penalty to the government, in order to deduct the payment.  Press reports peg Marsh & McLennan’s tax rate at 35%, so the structuring of the payment will result in alomost $300 million of tax savings.  See CNN Money and the Wall Street Journal.  (Thanks to Jim Maule (Villanova) for the tip.)