Merged Companies Can Use Old Loss Calculation Guidance for Now

Corporations buying loss-saddled companies can use older, favorable guidance when calculating how much those losses can reduce future tax bills—if the purchase happens before the IRS finalizes recent proposals.

The Internal Revenue Service Sept. 9 released proposed rules addressing the calculation of built-in gains and losses, which can change the amount of the losses merged companies can use. But companies that make the acquisition before the rules are final can still rely on a 2003 notice when calculating built-in gains and losses in later years, according to Kevin Jacobs, an IRS senior technician reviewer (TCJA).

“It really is ...