Maximizing Sec 382 Limitation Calculations for C Corps

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If you are a C Corporation with substantial net operating losses (NOLs) carried forward subject to IRC Sec 382 limitation provisions, and your current annual calculation limitation only consists of the base limitation amount, there is a strong likelihood that the overall calculation limitation currently being calculated is substantially understated. The base limitation amount is the annual limitation consisting of the product of the fair market value (FMV) of your company at the triggering event date times the applicable long-term tax-exempt rate for the affected taxable period.

Certain taxpayer-friendly IRS rulings now allow you to increase the base limitation amount by the unrealized built-in-gains provisions, helping you maximize the annual limitation. You must act fast, however, as the statute of limitations is closing on any 2009 returns currently on extension. You have three years from the extended due date to file for a claim for refund via amended return filing. Currently, all pre-2009 return filings and unextended return filings for calendar year 2009 are closed by statute for refund claim filing. The window for any 2009 calendar year return filings that were previously extended closes on 9/15/13.

For more information about Sec 382 calculation concepts, please contact your Aronson LLC tax advisor or Tax Director Jorge L. Rodriguez, CPA at 301.222.8220.

About Jorge Rodriguez

Jorge Rodriguez has written 11 post in this blog.

Jorge L. Rodriguez serves as a director with Aronson's Tax Services Group. He has over 25 years of professional experience in providing federal and state tax compliance and advisory services in the Washington Metropolitan area. Jorge specializes in Subchapter C, S and K, including mergers and acquisition compliance reporting and transaction costs deductibility analysis maximization; formation and entity classification planning and conversion; accounting methods and periods elections and changes; Sec 382 analysis and study; ASC 740 planning and documentation compliance; all aspects of multi state tax and nexus determination issues; and U.S. inbound tax compliance-related services pertaining to domestic entities with foreign ownership and/or foreign entities engaged in effectively connected U.S. trade or business.

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