The authors provide the background to the issues decided by the Supreme Court in Mayo regarding the deference the courts should grant to Treasury regulations. The implications are broad, since the deference issue determines whether the administration or the judiciary's opinion should prevail. The paper then discusses the impact of Mayo on the Chevron deference, and how the two-step approach should be applied to regulations and other Treasury pronouncements. Finally, the paper will address the role of legislative history and the Chenery and hard look doctrines within Chevron's two steps.

In each issue, JATA publishes reviews of textbooks that might be used for a particular tax course as well as books of general interest to tax researchers. All book reviews are solicited by the Associate Editor. However, if you know of a book that you would like reviewed, or if you are interested in reviewing a book, please contact the Associate Editor.

Determining the deductibility of fines, penalties, settlements, and other forms of restitution paid by taxpayers as a result of violations of criminal and civil law fall under a number of sometimes conflicting code sections, IRS pronouncements, and case law. In this article, we discuss the deductibility of fines, penalties, and other forms of restitution under the provisions of IRC Section 162(f) and the violation of public policy doctrine. Since some taxpayers attempt to capitalize the expenditures rather than deduct them, we also discuss the application of Sections 263 and 263A to these payments. If a taxpayer incurs expenditures in a transaction not part of a trade or business, then the deduction of the expenditure is controlled by Section 165. The application of the violation of public policy doctrine and Section 162(f) to Section 165 are also evaluated. Following the discussion of the current cases and rulings, we recommend several changes in tax law that will clarify and simplify when expenditures related to illegal activities are deductible.