Hedge Fund Buying Sears Likely Needs IRS OK in Its Tax Asset Bid

Eddie Lampert’s hedge fund will likely need a stamp of tax certainty from the IRS as it seeks to take advantage of a tax code provision that would allow it to seize Sears Holdings Corp.'s $1.7 billion in loss assets, tax professionals said.

The fund, ESL Investments Inc., confirmed publicly in a Feb. 14 filing that it would structure its acquisition of flailing Sears to take advantage of the exception in the tax code. It allows purchasers of bankrupt companies to avoid a limit on how much of the latter’s net operating ...