NOLs and Capital Loss Limitation

Question 1

How long is the testing period for determining whether a Section 382 stock ownership change has occurred?

Answer 1

3 years including the date of the ownership change (testing date)

Question 2

When does a Section 382 ownership change occur?

Answer 2

When one or more 5% shareholder increase their share of ownership of the stock by more than 50%

Question 3

What happens when a corporation’s section 382 limitation amount exceeds its taxable income?

Answer 3

The excess limitation amount is carried forward and added to the following year’s limitation amount

Question 4

What are the rules for NOLs arising in tax years ending on or before December 31st, 2017?

Answer 4

NOL can be carried back 2 years and carried forward 20 years

Question 5

What are the rules for NOLs arising in tax years between 2018-2020?

Answer 5

NOL can be carried back 5 years and carried forward indefinitely

Question 6

What are the rules for NOLs arising in tax years 2021 and later?

Answer 6

NOL cannot be carried back and carried forward indefinitely, but can only be offset by 80% of taxable income

Question 7

What are the rules for NOLs arising in tax years between 2018 and 2020 that are being used against taxable income in tax years 2021 and beyond?

Answer 7

NOLs are limited to offsetting only 80% of the taxable income.