Treasury and IRS Release Proposed Regulations Restricting NOL Utilization Under Section 382: Proposed Regulations Eliminate Taxpayer-Friendly Safe Harbor for Calculating Section 382 Recognized Built-In Gains and Losses

Sullivan & Cromwell LLP - September 18, 2019
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On September 9, the Internal Revenue Service and the Treasury Department issued proposed regulations that would alter existing guidance regarding the use of tax attributes, such as net operating losses (“NOLs”), following an ownership change under Section 382 of the Internal Revenue Code. Specifically, the proposed regulations would eliminate the so-called “Section 338 Approach” (as described in this memo) for calculating limits on NOL utilization.