I'd Check w/ the lawyer by email. I'd like to get the attorneys' opinion in writing with cites if possible.... lol 

• The operative term, and the problem, is that the restitution is considered a penalty, and as such is not tax deductible. Punitive payments are not considered ordinary and necessary business expenses under IRC 162. They are also not considered deductible for business or capital losses, since the nature of the restitution is a penalty.