Managing State NOLs: Tracking Carryovers and Limitations Under Section 381 and Section 382 and Planning Opportunities to Maximize Utilization

A NOL is a significant tax attribute. Now federal NOLs can only offset 80% of corporate income and are not carried back. Many states have their own NOL rules while others follow the federal and allow an indefinite carryforward. Still, almost all states have required modifications, add-backs and subtractions to calculate the state's annual income or net operating loss.

Most states conform with IRC Sections 381 and 382 regarding the carryforward and use of state NOL attributes after an ownership change. However, certain states have rules on how state NOL attributes carryover or are limited that differ from the federal treatment. Moreover, companies may be able to take advantage of planning opportunities to maximize the use of a state's NOL. Proper structuring of state NOLs can free-up significant cash for a company.

Tracking NOLs by state, researching different state rules and keeping up with expiration dates by state is an arduous but necessary process. There are apportionment strategies, combining techniques and acquisition planning steps that taxpayers can implement in maximizing state losses.

Listen as our panel of experts explains the varying states' treatment of NOLs, what to look out for to avoid losing a state NOL, and how to effectively track NOLs by state.

1. State NOLs before and after tax reform
2. State treatments of NOLs
3. Valuing an NOL
4. Section 381 carryover of state NOL attributes
5. Section 382 limits
6. Strategies to maximize tax reduction

The panel will explain these and other critical issues:

• New state NOL considerations after tax reform
• Common state treatments of NOLs
• Common state treatment of Section 381 carryover of state NOL attributes
• Common state treatment of Section 382 limits
• Planning opportunities to maximize utilization of state NOLs

Learning Objectives

After completing this course, you will be able to:

• Recognize common state methods for handling NOLs
• Implement strategies to maximize state NOL utilization
• Determine how to value a state NOL for financial reporting
• Ascertain best methods to track state NOL carryovers

• 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 preparing complex tax forms and schedules, supervising other preparers or accountants. Specific knowledge and understanding of pass-through taxation, including taxation of partnerships, S corporations and sole proprietorships, qualified business income, net operating losses and loss limitations; familiarity with net operating loss carry-backs, carry-forwards and carried interests.

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.