NOL Poison Pills: Using Corporate Law for Tax Purposes

Sarah Webber

University of Dayton

Karie Davis-Nozemack

Georgia Tech - College of Management

October 19, 2012

117 J. Tax’n. 312-318 (Dec. 2012)

Hundreds of thousands of corporations report net operating loss (NOL) carryovers every year. Corporations, with the benefit of NOL rules, may turn disappointing losses into favorable tax results. With an economic recovery on the horizon, 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 corporate law, including an NOL poison pill plan. This article discusses the motivations, benefits and consequences of NOL poison pill plans.

Number of Pages in PDF File: 12

Keywords: Tax, NOL, Poison Pill, 382, tax planning, corporate law, net operating loss, tax loss, shareholder

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Date posted: July 23, 2012 ; Last revised: August 2, 2013

Suggested Citation

Webber, Sarah and Davis-Nozemack, Karie, NOL Poison Pills: Using Corporate Law for Tax Purposes (October 19, 2012). 117 J. Tax’n. 312-318 (Dec. 2012). Available at SSRN: http://ssrn.com/abstract=2115764

Contact Information

Sarah Webber (Contact Author)
University of Dayton ( email )
300 College Park
Dayton, OH 45469
United States
937-229-2432 (Phone)
Karie Davis-Nozemack
Georgia Tech - College of Management ( email )
800 West Peachtree St., NW
Atlanta, GA 30308-1149
United States
HOME PAGE: http://mgt.gatech.edu/directory/faculty/davis-nozemack/index.html
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