Kirkland & Ellis discusses NOL Poison Pill – A Timely Prescription

With recent stock market volatility and sharp drops in stock market prices coupled with the continuing low interest rate environment, management and boards of directors of companies with significant net operating loss carryforwards (NOLs) may want to consider taking steps to preserve these valuable tax assets. Section 382 of the Internal Revenue Code applies formulaic limitations on the ability of a company to utilize its NOLs in future years if it undergoes an “ownership change” (i.e., an ownership increase of fifty percentage points or more by 5% shareholders of the company during a three-year testing period). In general, the … Read more