|
|
Article: The Sometimes Hidden Implications of Section 382.(Internal Revenue Code)
- Article from:
- Mondaq Business Briefing
- Article date:
- March 2, 2004
CopyrightCOPYRIGHT 2004 Mondaq Ltd. This material is published under license from the publisher through the Gale Group, Farmington Hills, Michigan. All inquiries regarding rights should be directed to the Gale Group. (Hide copyright information)
|
Section 382, which requires limits on the use of net operating loss carryforwards, was added to the Internal Revenue Code in 1954 and significantly revised in 1986. Since then, both Section 382 and the accompanying Treasury regulations have been a source of confusion for many corporations seeking to determine if and when they experienced an "ownership change" that will trigger a Section 382 limitation. The reason? In general, corporations may begin to focus on Section 382 only when they become profitable after many years of running at a tax loss and/or anticipate a future ownership change or other significant equity event. The rationale is that if a corporation has ...