Unless you've been hiding under a rock, you are well aware that there's been a lot of activity regarding Section 382 over the past several months.
In addition to 6 Written Determinations, IRS and Treasury have issued 3 Notices. For the most part, this guidance pertains to Section 382(l)(3)(C) and the litany of questions raised by the provision.
So what does this mean? For starters, it does mean that for the time being, there is more clarity in determining how to apply Section 382 to loss corporations that have multiple classes of stock.
Specifically, in Notice 2010-50, the IRS provides two acceptable methodologies for applying Section 382(l)(3)(C) -- Full Value Methodology and Hold Constant Principle.
However, there is still more work to be done. Notice 2010-50 is interim guidance. And until the comment period expires, it is unclear what, if anything, will change.
What else does it mean?
More companies are likely to review and maybe even redo their Section 382 Studies. Because of Notice 2010-50, companies now know there are 2 methodologies to use for determining whether they have triggered Section 382. I don't know about you, but I think a comparative analysis is certainly worth considering. How else do you truly know where your company stands?
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