Regulations under Section 382(h) Related to Built-In Gain and Loss; Withdrawal
Summary
This proposed IRS rule clarifies how companies are taxed when they undergo major ownership changes, specifically addressing how to measure hidden gains or losses in their assets. The rule aims to prevent companies from using complicated strategies to avoid paying taxes on profits they've accumulated over time.
Key Points
- 1The rule addresses Section 382 of the tax code, which limits tax benefits when a company's ownership significantly changes (such as through a merger or major stock purchase)
- 2It focuses on 'built-in gains and losses' — the difference between what a company's assets are actually worth versus what they paid for them, which can be hidden from tax calculations
- 3The IRS is withdrawing a previous 2019 proposal and replacing it with new guidance to clarify how companies should calculate these hidden gains and losses
- 4The regulation primarily affects large corporations, investment firms, and businesses involved in mergers and acquisitions that experience substantial ownership shifts
- 5Companies will need to follow new or updated rules when filing taxes after this regulation becomes final, potentially affecting how much tax they owe
Impact Assessment
If you are a small business owner or financial institution considering a major ownership change or acquisition, this means you will need to recalculate how built-in gains and losses in your assets are taxed, potentially affecting the after-tax proceeds from your transaction.
National
Moderate
Key Dates
July 2, 2025
Regulatory Connections
This summary is for informational purposes only. It may not capture all nuances of the regulation. Always refer to the official text for authoritative information.