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http://messages.finance.yahoo.com/Stocks_(A_to_Z)/...tof=12&frt=2
Zitat wamuchen:
(a) Corporations
(1) In general
If a corporation has a net capital loss for any taxable year (hereinafter in this paragraph referred to as the “loss year”), the amount thereof shall be—
(A) a capital loss carryback to each of the 3 taxable years preceding the loss year, but only to the extent—
(i) such loss is not attributable to a foreign expropriation capital loss, and
(ii) the carryback of such loss does not increase or produce a net operating loss (as defined in section 172 (c)) for the taxable year to which it is being carried back;
(B) except as provided in subparagraph (C), a capital loss carryover to each of the 5 taxable years succeeding the loss year; and
(C) a capital loss carryover to each of the 10 taxable years succeeding the loss year, but only to the extent such loss is attributable to a foreign expropriation loss, and shall be treated as a short-term capital loss in each such taxable year. The entire amount of the net capital loss for any taxable year shall be carried to the earliest of the taxable years to which such loss may be carried, and the portion of such loss which shall be carried to each of the other taxable years to which such loss may be carried shall be the excess, if any, of such loss over the total of the capital gain net income for each of the prior taxable years to which such loss may be carried. For purposes of the preceding sentence, the capital gain net income for any such prior taxable year shall be computed without regard to the net capital loss for the loss year or for any taxable year thereafter. In the case of any net capital loss which cannot be carried back in full to a preceding taxable year by reason of clause (ii) of subparagraph (A), the capital gain net income for such prior taxable year shall in no case be treated as greater than the amount of such loss which can be carried back to such preceding taxable year upon the application of such clause (ii).
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(2) Definitions and special rules
(A) Foreign expropriation capital loss defined
For purposes of this subsection, the term “foreign expropriation capital loss” means, for any taxable year, the sum of the losses taken into account in computing the net capital loss for such year which are—
(i) losses sustained directly by reason of the expropriation, intervention, seizure, or similar taking of property by the government of any foreign country, any political subdivision thereof, or any agency or instrumentality of the foregoing, or
(ii) losses (treated under section 165 (g)(1) as losses from the sale or exchange of capital assets) from securities which become worthless by reason of the expropriation, intervention, seizure, or similar taking of property by the government of any foreign country, any political subdivision thereof, or any agency or instrumentality of the foregoing.
By jhau5 on Ghost
"I think subsection B is more useful then subsection C which you have in bold letters there.
"(B) except as provided in subparagraph (C), a capital loss carryover to each of the 5 taxable years succeeding the loss year; and""
No. I was looking at the same clause and had issues with the 5-year limited period for unused cap. losses. So from the provisions, the owner can used the cap. losses to offset cap. gains 3-year back from and 5-year succeeding the "loss year". In our case, the effective date should be the first date of the "loss year" because of the execution of the GSA and the abandonment of WMB stock per the Order.
Now, under (C), if the loss was caused by government/policitcal decisions, you may carry the unused cap. loss foraward for 10 years instead of ordinarily 5 years.
The confusion is that whether they [i.e., hedgies after privatization] can again claim refunds on the cap. loss for the 3-year preceeding periods [i.e., 2011,2010,2009] from the IRS, given that (1) WMI claimed refunds on its NOLs and (2)the co is not privatized.
What I am thinking it is that the current tax refunds splitted between the settling parties are from WMB NOLs. WMI never used of its own and had much less amount of NOLs in the corporate level. That's why no one objected the split. WMI is getting money from the bank level in the GSA. Regarding WMI's tax benefits, it may choose to use, in the furture, NOLs or Capital Losses arising from the same tax causes. If the forgoing is correct, reorg. WMI still preserves the choice to use the unused tax benefits[i.e., nols vs cap. losses].
For the hedgies to use the cap. losses [i.e., either carry-back and carry-over], they must incorporate the newco into their own funds. The first step is to rid of retails. They have 10 years from now to do so because after 10 years the expiration will be reached.
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Zitat bopfan:
Subsection (C) is inapplicable as that section refers to nationalization: e.g., if WMI had assets in Bolivia and that country nationalized them.
Subsection (B) would seem to be the applicable provision, allowing Newco five (5) years to use capital losses occurring as a result of the GSA/confirmation/abandonment. Moreover, it won't take the SNs or any big acquirer even five years to exploit those capital losses (assuming other limitations on their usability are met).
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Zitat wamuchen:
Thanks for pointing it out. How can they transfer the cap losses to their funds or deliver their cap gains to the newco after privatization? Which way do you think they woud use?
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Zitat bopfan:
They may change its structure or they may not. The decision will be tax driven; everything is.
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Zitatende
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