International Contractors, Inc. has been hired by the US government to build roads and bridges in Spartania, a country with which the US recently signed a treaty. To facilitate the issuance of visas and licenses to begin construction, an official from the Spartanian government asked for 100 “facilitating payments” (also known as “grease payments”) of $5,000 each from the company. These payments were customary in Spartania and did not violate Spartanian law. The company intended to deduct the $500,000 payment in its financial statements. It was not clear if these payments violated the Foreign Corrupt Practices Act. To avoid IRS and possible Department of Justice scrutiny, the company’s tax director suggested that the payment be described as “taxes and licenses” on the tax return (line 17 of Form 1120) without further details. What do you think of the tax director’s advice? What tax and other consequences might result from taking this advice?