What are SRLY rules?
The SRLY rules are designed to limit the extent to which a consolidated group can claim a CNOL deduction that is attributable to NOLs generated in years in which the attributable member was not a member of the group.
What is a corporate contraction?
Corporate contraction language was added to Sec. 382(e)(2) to apply to a reduction in value to loss corporations undergoing one or more events that in substance have the effect of a redemption.
What is Section 382 limitation?
Section 382 generally limits the use of NOLs and credits following an ownership change. This occurs when one or more 5% shareholders increase their ownership, in aggregate, by more than 50% over the lowest percentage of stock owned by these shareholders at any time during the testing period, generally three years.
What is Nubig?
NUBIG/NUBIL generally equals the difference between aggregate FMV of assets and adjusted basis immediately before an ownership change, with adjustments for pre-change built-in items. • Threshold: Lesser of 15% of FMV of corporation’s assets or $10,000,000.
What is a SRLY register?
Except as provided in paragraphs (f)(2) and (3) of this section, the term separate return limitation year (or SRLY) means any separate return year of a member or of a predecessor of a member. Treas. Reg.
What is a loss corporation?
(1) Loss corporation The term “loss corporation” means a corporation entitled to use a net operating loss carryover or having a net operating loss for the taxable year in which the ownership change occurs.
How is Nubig calculated?
To determine whether a corporation has a NUBIG or a NUBIL, the value of the corporation’s assets (or the amount of the corporation’s liabilities, if liabilities exceed asset value) is compared to the tax basis in those assets, and that amount is adjusted by built-in income and deduction items.
How do you know if you have built in gain?
When an S corporation disposes of an asset that it held at the time it made its S election, it generally will have a recognized built-in gain or loss on the disposal of the asset. The corporation’s recognized gains or losses for a year are used to determine its net recognized built-in gain.
What does SRLY stand for?
382 and the separate-return-limitation-year (SRLY) rules that apply to consolidated returns.