Section 382, which limits the use of net operating losses (NOLs) and certain built-in losses following a corporate "ownership change," has taken on added importance due to the economic conditions that began in 2008. Fortunately, the IRS continues to issue formal and informal guidance under section 382, including two recent private letter rulings (PLRs) that address significant technical issues under section 382(h), which provides numerous special rules for built-in gains and losses. While a letter ruling cannot be relied on except by the particular taxpayer to which it was issued, PLRs may offer important insights into current IRS National Office thinking.
One section 382 PLR issued late last year -- PLR 201051019 -- addressed the application of net unrealized built-it gain and loss rules to liabilities discharged in bankruptcy. The other -- PLR 201051020 -- confirmed recognized built-in gain treatment for section 1248 dividends from the sale or exchange of controlled foreign corporation (CFC) stock after multiple ownership changes.