What is the taxation treatment for 'Fines and penalties? Group of answer choicesAn expense when payable.An expense on accrual.A tax deduction on cash payment.Not deductible
Question
What is the taxation treatment for 'Fines and penalties? Group of answer choicesAn expense when payable.An expense on accrual.A tax deduction on cash payment.Not deductible
Solution
Fines and penalties are generally not tax deductible. This is because they are seen as a punishment for illegal or unethical activities, and the government does not want to incentivize such behavior by allowing it to reduce a company's or individual's taxable income. Therefore, even if a fine or penalty is paid out during a tax year, it cannot be counted as an expense when calculating taxable income.
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