After Wellpoint, a for-profit health insurance company, acquired three nonprofit Blue Cross-Blue Shield companies by merger in the 1990s, the Attorneys General of Connecticut, Kentucky and Ohio sued Wellpoint (then operating under its former name of Anthem, Inc.) to recover assets they said were charitable assets of the nonprofit insurers. They ultimately settled the case for more than $113 million to be paid to healthcare foundations. Wellppoint then sought to deduct the payments as an ordinary and necessary business expense, but the IRS said it had to treat the payments, plus about $827,000 in legal expenses, as a capital cost of the acquisition. The Tax Court agreed with the IRS and the...