Can you provide examples of when Section 382 limitation applies?
Section 382 of the Internal Revenue Code (IRC) applies to limit the use of a corporation's net operating loss (NOL) carryforwards and certain other tax attributes following an "ownership change." An ownership change occurs when there is a cumulative change in the corporation's ownership by "5-percent shareholders" that exceeds 50 percentage points over a rolling three-year period. Here are a few examples of when a Section 382 limitation might apply: 1. **Acquisitions**: If a company is acquired by another company and the ownership change threshold is met, the NOL carryforwards of the acquired company may be subject to the Section 382 limitation. 2. **Private Equity Transactions**: When a private equity firm buys a controlling interest in a corporation, resulting in an ownership change, the NOLs of the target corporation may be limited. 3. **Public Offerings**: If a corporation issues new shares of stock to the public and this results in a significant shift in ownership among 5-percent shareholders, it could trigger Section 382. 4. **Redeemable Shares**: If a corporation redeems shares and this significantly alters the ownership structure, potentially causing more than a 50 percentage point change, Section 382 could be triggered. 5. **Ownership Shifts Among Existing Shareholders**: Even without a formal transaction, if existing shareholders increase their stakes in a way that causes a sufficient shift in ownership, Section 382 could apply. When Section 382 is triggered, the annual
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