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The Carryforward Of Net Operating Losses And Other Tax Attributes After Bankruptcy Reorganizations., Martin M. Van Brauman

St. Mary's Law Journal

When stock is exchanged for debt in a bankruptcy reorganization, potentially abusive tax situations can result if the reorganization occurs strictly for the carryforward of tax attributes to the acquiring corporation. The basic question is to what extent the discharge of indebtedness provisions, the application of the various statutory and judicial requirements, and the consolidated return regulations prohibit or restrict the carryforward of the tax history of the debtor corporation. Bankruptcy reorganization for a corporation under Chapter 11 of the Bankruptcy Code can take the form of either a recapitalization or a reorganization. Because a “G” reorganization involves a discharge …