We have significant experience in preparing these calculations for our clients. Our calculations are often reviewed by specialists from other firms in connection with their financial statement audit of our mutual clients.
Section 382 will limit the ability of a company to utilize net operating loss and credit carry forwards in the event of a greater than 50 percent ownership change. The approach taken in the calculations will help determine whether or not there was a greater than 50 percent ownership change. Consideration must be given to fair market value, which is difficult to determine for privately held companies. The rules of Section 382 are very complex and include a number of exceptions. Judgment is often required where information is not available, especially from early years in a company’s history.