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Net Operating Losses: A Valuable Asset Worth Preserving

Net Operating Losses: A Valuable Asset Worth Preserving

Troubled companies that incur significant net operating losses (“N.O.L.’s”) can carry back those losses for up to two years in order to obtain refunds of tax.  In addition, the losses can be carried forward for up to 20 years to reduce future taxable income.  However, the losses cannot be monetized through transfers to others.  Code §§382 and 269 and separate return limitation year (“S.R.L.Y.”) provisions under the consolidated tax return regulations are designed to prevent taxpayers from selling the benefit of the N.O.L. directly or indirectly.  Philip R. Hirschfeld explains how the loss limitation rules are applied when (i) a change occurs in the ownership of the loss corporation, (ii) a reshuffle of profitable and unprofitable businesses occurs to benefit from a “mixing bowl” effect, or (iii) companies with existing losses enter an affiliated group filing a consolidated Federal income tax return.

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Tax Home v. Abode – Are They the Same for Code §911 Purposes?

Tax Home v. Abode – Are They the Same for Code §911 Purposes?

Section 911 of U.S. tax law provides certain tax benefits to persons who report foreign earned income.  To be entitled to the benefits, an individual must have a “tax home” abroad, provided that he or she does not have an “abode” in the U.S.  A recent summary opinion by the Tax Court illustrates the difference between those two terms.  Rusudan Shervashidze and Philip R. Hirschfeld explain.

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Tax Concerns on Outbound I.P. Transfers: Pitfalls & Planning in Light of I.R.S. Defeat in Amazon Case

Tax Concerns on Outbound I.P. Transfers: Pitfalls & Planning in Light of I.R.S. Defeat in Amazon Case

In the 21st century, the method of apportioning income from intangible property (“I.P.”), between the various jurisdictions in which the I.P. is developed, owned, and used or consumed, is contentious.  This was evidenced in a recent Tax Court case, Amazon.com, Inc. & Subsidiaries v. Commr., which dealt with transfer pricing rules applicable to an outbound transfer of I.P. and a related cost sharing agreement.  Philip R. Hirschfeld discusses the case in the context of Code §367(d), which relates to outbound transfers of I.P., and Treas. Reg. §1.482-7, which addresses qualified cost sharing agreements.

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Good News for REITs Investing in Non-US Real Estate

Good News for REITs Investing in Non-US Real Estate

Published in the GGi Insider, No. 88, March 2017 (p. 44).

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Implementing the Border Adjustment Tax: Winners & Losers

Implementing the Border Adjustment Tax: Winners & Losers

The border adjustment tax will harm certain companies and aid others.  To be expected, exporters like the proposal and importers hate it.  Philip R. Hirschfeld and Kenneth Lobo look at the industries that will be winners and those that will be losers if the border adjustment tax is adopted.  Strangely, each side argues that employment will be increased if its position is adopted, an example of how voodoo economics support a politicized tax proposal.

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