Davis Polk Discusses M&A Impact of Changes to Loss Carryforwards

On September 9, 2019, the Internal Revenue Service (“IRS”) released proposed regulations (the “Proposed Regulations”) that, if finalized in their current form, would in many cases dramatically reduce the portion of a company’s net operating loss (“NOL”) carryforward that is available to be used following a so-called ownership change of the company.  The Proposed Regulations would be effective for ownership changes occurring after they are finalized.

The Proposed Regulations would make other significant changes potentially applicable to distressed companies.  Those aspects of the Proposed Regulations are beyond the scope of this memorandum.  To learn … Read more