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131 STAT. 2127 PUBLIC LAW 115–97—DEC. 22, 2017 shall be allowed under this chapter for any amount paid or incurred (whether by suit, agreement, or otherwise) to, or at the direction of, a government or governmental entity in rela- tion to the violation of any law or the investigation or inquiry by such government or entity into the potential violation of any law. ‘‘(2) EXCEPTION FOR AMOUNTS CONSTITUTING RESTITUTION OR PAID TO COME INTO COMPLIANCE WITH LAW.— ‘‘(A) IN GENERAL.—Paragraph (1) shall not apply to any amount that— ‘‘(i) the taxpayer establishes— ‘‘(I) constitutes restitution (including remedi- ation of property) for damage or harm which was or may be caused by the violation of any law or the potential violation of any law, or ‘‘(II) is paid to come into compliance with any law which was violated or otherwise involved in the investigation or inquiry described in paragraph (1), ‘‘(ii) is identified as restitution or as an amount paid to come into compliance with such law, as the case may be, in the court order or settlement agree- ment, and ‘‘(iii) in the case of any amount of restitution for failure to pay any tax imposed under this title in the same manner as if such amount were such tax, would have been allowed as a deduction under this chapter if it had been timely paid. The identification under clause (ii) alone shall not be suffi- cient to make the establishment required under clause (i). ‘‘(B) LIMITATION.—Subparagraph (A) shall not apply to any amount paid or incurred as reimbursement to the government or entity for the costs of any investigation or litigation. ‘‘(3) EXCEPTION FOR AMOUNTS PAID OR INCURRED AS THE RESULT OF CERTAIN COURT ORDERS.—Paragraph (1) shall not apply to any amount paid or incurred by reason of any order of a court in a suit in which no government or governmental entity is a party. ‘‘(4) EXCEPTION FOR TAXES DUE.—Paragraph (1) shall not apply to any amount paid or incurred as taxes due. ‘‘(5) TREATMENT OF CERTAIN NONGOVERNMENTAL REGU- LATORY ENTITIES.—For purposes of this subsection, the fol- lowing nongovernmental entities shall be treated as govern- mental entities: ‘‘(A) Any nongovernmental entity which exercises self- regulatory powers (including imposing sanctions) in connec- tion with a qualified board or exchange (as defined in section 1256(g)(7)). ‘‘(B) To the extent provided in regulations, any non- governmental entity which exercises self-regulatory powers (including imposing sanctions) as part of performing an essential governmental function.’’. (2) EFFECTIVE DATE.—The amendment made by this sub- section shall apply to amounts paid or incurred on or after 26 USC 162 note. VerDate Sep 11 2014 10:09 Oct 18, 2018 Jkt 079139 PO 00097 Frm 00075 Fmt 6580 Sfmt 6581 E:\PUBLAW\PUBL097.115 PUBL097 dkrause on DSKBC28HB2PROD with PUBLAWS