This article originally appeared in the May 2026 issue of The Tax Adviser.
Section 382 limits the use of valuable tax attributes such as net operating losses (NOLs) and built-in losses following an ownership change. As explained in the preamble to 2019 proposed regulations, inherent in the policy purpose of Sec. 382 is the goal of preventing a loss corporation from obtaining a greater benefit from its losses attributable to the period of time before the ownership change than it would have obtained had the change not occurred (the Neutrality Principle).
In today’s volatile markets, the interplay between net unrealized built-in losses (NUBIL), recognized built-in losses (RBIL), and the Sec. 382 limitation is increasingly relevant. Market shocks and sudden valuation changes from speculative investment cycles have made NUBIL and RBIL calculations both technically complex and strategically significant for entire industries. Furthermore, the best tax outcome may conflict with business needs, as optimal tax planning can require holding non-performing assets longer than is commercially desirable.
This article explores practical strategies for navigating NUBIL and RBILs following an ownership change, focusing on the safe-harbor methods described in Notice 2003-65, when those safe-harbor methods may not be optimal, and key ambiguities that can materially impact a loss company’s NUBIL profile.
BDO’s Sean Finn and Jesse Hooker provides details in the full article in The Tax Adviser.