On the latest episode of The Bank Account, Jonathan and I discuss the ability of bank holding companies to raise capital while preserving valuable deferred tax assets.
Section 382 of the Internal Revenue Code triggers a limitation on the carry-forward of net operating losses and built-in losses in the event of an “ownership change” in the company. However, Section 382’s definition of what constitutes an ownership change is very different than many interpretations of a change in control. Various segregation and aggregation rules can result in an ownership change being triggered when one might not expect it, but can also permit, with advanced planning, significant capital raises without triggering an ownership change. This podcast provides a high level overview of some of the intricacies involved in Section 382, and offers insight as to how some of the recent large recapitalizations have preserved valuable deferred tax assets.
I think Jonathan and I broke several rules of good podcasting on this episode in that we discuss (1) numbers, (2) math, and (3) the tax code. However, we think and hope that we’ve done so in an informative manner. Enjoy!