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In April of the current year, the Mojena Corporation, a computer power supply manufacturer, was found guilty of price fixing under the Sherman Anti-Trust Act and fined $50,000. In addition, The United States sued Mojena under Section 4A of the Clayton Act for $140,000, of which $100,000 represents the actual damages (compensatory damages) resulting from the price fixing and $40,000 represents court costs. In July, Mojena Corp. pays the United States $190,000 ($50,000 þ $100,000 þ $40,000) in full settlement of the charges.
REQUIRED: Determine the amount Mojena can deduct on its tax return. Search a tax research database and find the relevant authority(ies) that form the basis for your answer. Your answer should include the exact text of the authority(ies) and an explanation of the application of the authority to Mojena's facts. If there is any uncertainty about the validity of your answer, indicate the cause for the uncertainty.
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