NOL Poison Pills: Using Corporate Law for Tax Purposes

117 J. Tax’n. 312-318 (Dec. 2012)

12 Pages Posted: 23 Jul 2012 Last revised: 28 Oct 2015

Sarah Webber

University of Dayton

Karie Davis-Nozemack

Georgia Institute of Technology - Scheller College of Business

Date Written: October 19, 2012

Abstract

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.

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

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: https://ssrn.com/abstract=2115764

Sarah Webber (Contact Author)

University of Dayton ( email )

300 College Park
Dayton, OH 45469
United States
937-229-2432 (Phone)

Karie Davis-Nozemack

Georgia Institute of Technology - Scheller College of Business ( email )

800 West Peachtree St.
Atlanta, GA 30308
United States

HOME PAGE: http://mgt.gatech.edu/directory/faculty/davis-nozemack/index.html

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