Key takeaways 

• The Internal Revenue Service has announced a safe harbor election that will generally allow electing taxpayers to deduct 70% of their success-based fees (such as investment banking fees) paid in M&A transactions. 
• This is a significant liberalization of the existing regime, which generally presumes such fees to be non-deductible, and will likely make it possible for taxpayers in M&A deals to deduct a greater amount of such fees. 
• The IRS acknowledged that the treatment of success-based fees has been the subject of controversy, and stated that it expects much of this controversy can be eliminated by providing taxpayers with a simplified method for determining the deductible portion of success-based fees.