Irs Code Section 382

For purposes of section 382 i of the internal revenue code of 1986 as added by this section any equity structure shift pursuant to a plan of reorganization adopted before january 1 1987 shall be treated as occurring when such plan was adopted. What is the internal revenue code irc section 382. A loss corporation is a firm that can use tax attributes such as net operating loss nol to deduct their taxable income.

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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.

Irs code section 382. 94 455 shall not apply to any increase in percentage points occurring after december 31 1988 and. Under section 382 of the irc a c corporation is required to have a limit to offset historic losses. Although corporations are allowed to utilize pre change nols there is a limit to how much they can use to offset tax liability.

As a summary c corporations are those under us law that are taxed separately from their owners. In general the irc 382 or the internal revenue code 382 limits the ability of a corporation to use nol or net operating loss carryovers once the corporation has undergone an ownership change. I section 382 a of the internal revenue code of 1954 as in effect before the amendment made by subsection a and the amendments made by section 806 of the tax reform act of 1976 section 806 of pub.

Assume an acquirer purchases all the stock of lossco for 100. Assume also that the long term tax exempt rate is 2.