Tax Carryover Limitation Act of 1986

Summary

Tax Carryover Limitation Act of 1986 - Amends the Internal Revenue Code to revise the method of calculating the limitations on net operating loss carryovers and certain built-in losses following a change in control of a corporation. Specifies that the amount of such limitation for a post-change in ownership year shall be equal to the value of the old loss corporation immediately before the ownership change multiplied by the Federal mid-term rate in effect on the change date. Provides that if such limitation for any post-change year exceeds the taxable income of the new loss corporation which was offset by pre-change losses, the limitation for the next post-change year shall be increased by the amount of such excess. Sets forth definitions, ordering rules, and special rules relating to such limitation. Provides for special rules for built-in gains and losses. Specifies that if the old loss corporation has a net unrealized built-in gain, the limitation for any taxable year ending in the recognition period shall be increased by the recognized built-in gains for such taxable year. Requires the Secretary of the Treasury to prescribe regulations, for cases of an ownership change of a corporation, which apply such limitations with respect to net operating loss carryovers to: (1) any unused credit of such corporation for increasing research activities and the carryback and carryforward of unused credits; (2) any excess foreign taxes paid; and (3) any net capital loss of such corporation.

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1 official file

• Introduced in Senate

  summary · EN · 19 March 1986

  Open at official source

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