26 U.S.C. § 186 : US Code - Section 186: Recoveries of damages for antitrust violations, etc.

Search 26 U.S.C. § 186 : US Code - Section 186: Recoveries of damages for antitrust violations, etc.

(a) Allowance of deduction
If a compensatory amount which is included in gross income is
received or accrued during the taxable year for a compensable
injury, there shall be allowed as a deduction for the taxable year
an amount equal to the lesser of -
(1) the amount of such compensatory amount, or
(2) the amount of the unrecovered losses sustained as a result
of such compensable injury.
(b) Compensable injury
For purposes of this section, the term "compensable injury" means
-
(1) injuries sustained as a result of an infringement of a
patent issued by the United States,
(2) injuries sustained as a result of a breach of contract or a
breach of fiduciary duty or relationship, or
(3) injuries sustained in business, or to property, by reason
of any conduct forbidden in the antitrust laws for which a civil
action may be brought 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).
(c) Compensatory amount
For purposes of this section, the term "compensatory amount"
means the amount received or accrued during the taxable year as
damages as a result of an award in, or in settlement of, a civil
action for recovery for a compensable injury, reduced by any
amounts paid or incurred in the taxable year in securing such award
or settlement.
(d) Unrecovered losses
(1) In general
For purposes of this section, the amount of any unrecovered
loss sustained as a result of any compensable injury is -
(A) the sum of the amount of the net operating losses (as
determined under section 172) for each taxable year in whole or
in part within the injury period, to the extent that such net
operating losses are attributable to such compensable injury,
reduced by
(B) the sum of -
(i) the amount of the net operating losses described in
subparagraph (A) which were allowed for any prior taxable
year as a deduction under section 172 as a net operating loss
carryback or carryover to such taxable year, and
(ii) the amounts allowed as a deduction under subsection
(a) for any prior taxable year for prior recoveries of
compensatory amounts for such compensable injury.
(2) Injury period
For purposes of paragraph (1), the injury period is -
(A) with respect to any infringement of a patent, the period
in which such infringement occurred,
(B) with respect to a breach of contract or breach of
fiduciary duty or relationship, the period during which amounts
would have been received or accrued but for the breach of
contract or breach of fiduciary duty or relationship, and
(C) with respect to injuries sustained by reason of any
conduct forbidden in the antitrust laws, the period in which
such injuries were sustained.
(3) Net operating losses attributable to compensable injuries
For purposes of paragraph (1) -
(A) a net operating loss for any taxable year shall be
treated as attributable to a compensable injury to the extent
of the compensable injury sustained during such taxable year,
and
(B) if only a portion of a net operating loss for any taxable
year is attributable to a compensable injury, such portion
shall (in applying section 172 for purposes of this section) be
considered to be a separate net operating loss for such year to
be applied after the other portion of such net operating loss.
(e) Effect on net operating loss carryovers
If for the taxable year in which a compensatory amount is
received or accrued any portion of a net operating loss carryover
to such year is attributable to the compensable injury for which
such amount is received or accrued, such portion of such net
operating loss carryover shall be reduced by an amount equal to -
(1) the deduction allowed under subsection (a) with respect to
such compensatory amount, reduced by
(2) any portion of the unrecovered losses sustained as a result
of the compensable injury with respect to which the period for
carryover under section 172 has expired.