CARRYFORWARD LIMITATION

CHALLENGE

IRC Section 382 was enacted to guard against the “trafficking of loss carryovers.” The limitation imposed by this rule restricts the amount of a corporation’s taxable income that can be offset by a taxpayer’s net operating loss (NOL) carryovers (“382 limitation”) in taxable years after a change of ownership has occurred. Essentially, the rule was implemented to prevent both public and private taxpayers from transferring stock to utilize the respective corporation’s NOL. The “382 limitation” is triggered when a corporation undergoes a greater than 50% ownership change over a three-year test period. This generally applies to public and private corporations that have tax attribute carryovers and are turning the corner to profitability and utilizing the tax attribute carryovers or are releasing the valuation allowance against deferred tax assets under FAS 109. IRC Section 382 imposes parallel restrictions on the carryover of capital losses and certain credits.

SOLUTION

True Partners experts have an in-depth understanding of IRC Section 382 rules and restrictions. We work closely with our clients to address aggregation and segregation rules, constructive ownership and attribution rules, anti-stuffing and reduction for non-business asset provisions, and net unrealized built-in gains and losses, among other significant issues. A thorough IRC Section 382 study enables a company to identify available tax benefits, and to plan effectively for the future.

THE TRUE PARTNERS TEAM

Our professionals work closely with our clients and their auditors to ascertain the most advantageous outcome available under the tax law. Contact us, or click here for an assessment of your needs.

Michael Chen 408.625.5088		Ross J. Valenza, CPA 813.434.4002