Companies Get IRS Clarity for Calculating Losses in Acquisition (1)

Companies engaging in mergers and acquisitions—particularly those with large losses—got some new clarity on how to calculate their tax write-offs when they come under new ownership.

The IRS proposal (REG-125710-18) released Sept. 9 outlines how the agency will integrate the 2017 tax overhaul’s numerous changes to the code into its treatment of so-called built-in gains and losses.

When one company buys a loss-laden one, the acquisition triggers a cap on how much of those losses the new, combined company can use to shrink its tax liabilities under tax code Section 382, to keep companies ...