Document Type

Article

Publication Date

12-2012

Publication Source

Journal of Taxation

Abstract

Hundreds of thousands of corporations report net operating loss (NOL) carryovers every year.1 Corporations, with the benefit of NOL rules, may turn disappointing losses into favorable tax results. During economic recovery, corporations are in better position to fully utilize the benefits of NOLs generated in prior years. NOL usage is not without peril, however. Corporations should carefully monitor corporate ownership changes to ensure that NOLs are not lost to the NOL trafficking rules. Under the NOL trafficking rules, excessive shareholder turnover triggers substantial NOL limitations. Unfortunately, corporations are not in control of their shareholder turnover, and therefore not in complete control of their NOLs. To maintain NOL control, corporate tax planning may utilize defensive tactics found in corporate law, including an NOL poison pill plan. This article discusses the motivations, benefits and consequences of NOL poison pill plans.

Inclusive pages

1-12

ISBN/ISSN

0022-4863

Document Version

Published Version

Comments

This document is available for download with the permission of the publisher, Thomson Reuters. Permission documentation is on file.

Publisher

Warren, Gorham & Lamont for Tax Research Group

Volume

117

Peer Reviewed

yes