Snap shots, successive ownership changes, and other section 382 traps

Article Abstract:

The incompatibility of the static approach to loss utilization limits under IRC section 382 and the fluid nature of business appears to have created confusion in the treatment of net operating loss carryovers. Following a corporate ownership change, a limit is placed on the use of net operating losses by section 382, purportedly to restrict the market for losses. Section 382's snapshot approach to valuation in calculating its limits could result in loss corporations manipulating ownership transfer timing to maximize valuation of the corporation.

Corporate reorganizations, Loss deductions, Carryforward losses, Carryover losses

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Historic and pre-historic shareholders in two-step mergers

Article Abstract:

Two-step merger may be subject to the step transaction doctrine if the reorganization stages are characterized by the IRS as a single event. If the first stage is characterized as 'old and cold,' the transactions will be treated as separate. Under the historic shareholder theory, it is possible that a two-step transaction may not be subject to the step transaction doctrine even though it is not old enough to be considered 'old and cold.' Application of this theory requires studying the stock ownership history of the corporation.

Acquisitions and mergers

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Partial liquidations return: new issues for an old provision

Article Abstract:

Since the passing of the Taxpayer Relief Act of 1997, partial liquidations of close corporations have significant tax advantages. The author reviews unclear issues in the tax treatment of such liquidations.

United States, Corporate income taxes, Close corporations, Closely held corporations, Capital gains tax, Liquidation

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