What portion of damages paid for violating federal antitrust laws is deductible for tax purposes?
Understand the Problem
The question asks about the deductibility of antitrust lawsuit damages for tax purposes. We need to know what portion, if any, of these damages a company can deduct.
Answer
One-third of damages paid for violating federal antitrust laws is deductible for tax purposes.
For violations of federal antitrust laws, one-third of damages paid may be deductible for tax purposes. According to 26 CFR § 1.162-22, no deduction is allowed for two-thirds of any amount paid or incurred after December 31, 1969.
Answer for screen readers
For violations of federal antitrust laws, one-third of damages paid may be deductible for tax purposes. According to 26 CFR § 1.162-22, no deduction is allowed for two-thirds of any amount paid or incurred after December 31, 1969.
More Information
The deduction is limited to one-third of the damages due to Section 162(g) of the Internal Revenue Code, which specifically addresses the deductibility of payments related to antitrust violations.
Tips
It's easy to get confused about whether it's one-third deductible or two-thirds. Remember, the law disallows a deduction for two-thirds, meaning only one-third can be deducted.
Sources
- 26 CFR § 1.162-22 - Treble damage payments under the antitrust ... - law.cornell.edu
- [PDF] Tax Effects of Antitrust Payments and Recoveries - woodporter.com
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