Impact of Tax Reform on Financially Distressed Companies: Operating and Restructuring Challenges

Several provisions in the 2017 tax reform legislation present significant challenges to distressed or over-leveraged U.S. companies. Fundamental changes in NOL treatment, business interest deductibility under new Section 163(j), and treatment of debt guarantees by foreign subsidiaries could have a severely negative impact on businesses going through a financial downturn.

Listen as our experienced panel provides a practical guide to the impact of the 2017 Tax Act on financially distressed companies. Taken as a whole, the 2017 Tax Act creates new burdens for companies experiencing a business downturn, either currently or in the future.

1. Prior NOL and business interest deductibility
2. New net operating loss rules
   1. Elimination of NOL carryback for losses generated in 2018 or later
   2. New 80% NOL offset limitation
   3. Increased value of pre-2018 NOLs
3. New limitations on business interest deductibility under Section 163(j)
4. Treatment of foreign subsidiary debt guarantees
5. Planning opportunities for financially distressed companies

The panel will discuss these and other relevant topics:

• How the elimination of the NOL carryback could impact distressed companies in the event of a significant market downturn
• How the 80% limitation on the use of NOL carryforwards can result in an effective minimum tax rate for businesses with insufficient current-year losses
• How to address the business interest income limitations under 163(j), particularly in light of the extensive proposed regulations released on November 26, 2018
• Impact of new expensing provisions on distressed companies
• How the changes to Section 956 impact potential debt collateral packages
• Certain problems posed by the new international tax rules for distressed companies, including how those rules interact with existing NOLs

Learning Objectives

After completing this course, you will be able to:

• Identify the impact of the elimination of NOL carrybacks on companies experiencing financial distress
• Recognize how the limitations on business interest deductibility will hit a company undergoing a market or financial downturn
• Discern planning opportunities to avoid taxable repatriation treatment of foreign subsidiary debt guarantees

• Field of Study: Taxes
• Level of Knowledge: Intermediate
• Advance Preparation: None
• Teaching Method: Seminar/Lecture
• Delivery Method: Group-Internet (via computer)
• Attendance Monitoring Method: Attendance is monitored electronically via a participant's PIN and through a series of attendance verification prompts displayed throughout the program
• Prerequisite: Three years+ business or public firm experience at mid-level within the organization, preparing complex tax forms and schedules; supervisory authority over other preparers/accountants. Specific knowledge and understanding of Corporate Tax Rules and Regulations, and International Taxation.

Strafford Publications, Inc. is registered with the National Association of State Boards of Accountancy (NASBA) as a sponsor of continuing professional education on the National Registry of CPE Sponsors. State boards of Accountancy have final authority on the acceptance of individual courses for CPE Credits. Complaints regarding registered sponsons may be submitted to NASBA through its website: www.nasbaregistry.org.

IRS Approved Provider

Strafford is an IRS-approved continuing education provider offering certified courses for Enrolled Agents (EA) and Tax Return Preparers (RTRP).