Week 4 Analysis

Week 4 Analysis - occurred prior to the date of the final...

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Week 4 Analysis Analysis: Internal Revenue Code § 162 (f) provided information for trade or business expenses for fines and penalties. There are no deduction shall be allowed under subsection (a) for any fine or similar penalty paid to a government for the violation of any law. It also provided in Internal Revenue Code § 162 (g), Treble damage payments under the antitrust laws. If in a criminal proceeding a taxpayer is convicted of a violation of the antitrust laws, or his plea of guilty or nolo contendere to an indictment or information charging such a violation is entered or accepted in such a proceeding, no deduction shall be allowed under subsection (a) for two-thirds of any amount paid or incurred— (1) on any judgment for damages entered against the taxpayer under section 4 of the Act entitled “An Act to supplement existing laws against unlawful restraints and monopolies, and for other purposes”, approved October 15, 1914 (commonly known as the Clayton Act), on account of such violation or any related violation of the antitrust laws which
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Unformatted text preview: occurred prior to the date of the final judgment of such conviction, or (2) in settlement of any action brought under such section 4 on account of such violation or related violation. Therefore, MegaCorp, Inc cannot write this $5 million judgment as a business expense. Internal Revenue Code 263 (4) Capital expenditures on special rule where risk of loss diminished. The running of any period of time applicable under paragraph (1)(B) (as modified by paragraph (2) shall be suspended during any period in which(A) the taxpayer holds, has an option to buy, or is under a contractual obligation to buy, substantially identical stock or securities, or (B) under regulations prescribed by the Secretary, a taxpayer has diminished his risk of loss by holding 1 or more other positions with respect to substantially similar or related property. Therefore MegaCorp, Inc. has to put this judgment as a capital expenditure....
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Week 4 Analysis - occurred prior to the date of the final...

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