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Clarification on use of sec. 381(c)(1)(b) in tax-free asset acquisition by a consolidated group.(tax guidance)

The 2001 Guidance Priority List should include a project to clarify the operation of Sec. 381(c)(1)(B) in tax-free asset acquisitions by a consolidated group. Such guidance is necessitated by the recent adoption of the "overlap rule" providing for the elimination of separate return limitation year (SRLY) limits in certain transactions also giving rise to a limit under Sec. 382.

Background

Under Sec. 381(c)(1)(B), the acquiring corporation (Acquiring) in a tax-free asset reorganization may use the target corporation's (Target's) net operating loss carryovers in Acquiring's tax year of the acquisition only up to an amount that bears the same ratio to Acquiring's taxable ...

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