What is a 382 event?
Background. In an effort to limit loss trafficking, Congress enacted Sec. 382 to limit the use of corporate NOLs following an ownership change. An ownership change is defined generally as a greater than 50% change in the ownership of stock among certain 5% shareholders over a three-year period (Sec. 382(g)).
How is 382 calculated?
The Section 382 limitation is determined by multiplying the value of the loss corporation’s equity before the ownership change by a specified rate that is determined each month by Treasury and the IRS. LossCo undergoes a change in ownership and has a NUBIG of $70 because of the built-in gain in its assets.
What is a 382 NOL?
Section 382 of the Internal Revenue Code generally requires a corporation to limit the amount of its income in future years that can be offset by historic losses, i.e., net operating loss (NOL) carryforwards and certain built-in losses, after a corporation has undergone an ownership change.
Does section 382 apply to family members?
Siblings are not considered family, but parents, children and grandchildren are. Section 382 modifies these family attribution rules to treat all family members as one shareholder rather than separate shareholders.
Can you sell NOL?
Selling net operating losses is achieved by selling an interest or percentage of the company. The Internal Revenue Code under Section 704(a) allows partners to allocate or share their profits and losses at their discretion. But, partner allocations are limited under certain rules such as Section 704(d).
Can you sell NOLs?
What is a SRLY NOL?
SRLY Losses A SRLY loss is a loss incurred by a member of a consolidated group in a year in which the corporation filed a separate tax return or was included in a consolidated return with another affiliated group.
Can you buy business losses?
The 1981 tax law allows profitable companies to buy a loss from the less fortunate. The new rules in the leasing section of last year’s tax law can cut 15% to 20% from the cost of new equipment if your business wouldn’t ordinarily owe much income tax.