Discussion:Sec. 382 NOL after ownership change
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Discussion Forum Index --> Advanced Tax Questions --> Sec. 382 NOL after ownership change
Discussion Forum Index --> Tax Questions --> Sec. 382 NOL after ownership change
| 21 January 2008 | |
| Client enquired if he could purchase a loss corporation and utilize loss.
The business of NOL corp. is real estate. He is not involved in real estate. 382 states that "if the new loss corporation does not continue the business enterprise of the old loss corporation" that 382 is zero. Am I correct in saying that the business enterprise in this case is real estate and that he will not continue with that therefore NOL cannot be utilized if he purchases corporation? | |
| 22 January 2008 | |
| Yes, you are correct (IRC Sec. 382(c)). There is an exception for unrecognized built-in gains of the old loss corporation; the Sec. 382 limitation would not be less than the amount of such a gain. For example, if the target corporation owned property that was worth more than its adjusted (inside) tax basis at the time of the change of ownership, and it subsequently sold the property and recognized a gain, the gain could be offset by the old loss corporation's NOL. But only such built-in gains can be offset. | |
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