Does a "flip back" create a 382 election?

Section 382 Election and "Flip Back" Transactions

Section 382 Election Overview

Section 382 of the Internal Revenue Code (IRC) pertains to limitations on the use of net operating loss (NOL) carryforwards and certain other tax attributes following an ownership change in a corporation. An ownership change occurs when there is a shift in ownership by more than 50 percentage points by 5-percent shareholders over a three-year testing period.

"Flip Back" Transactions

A "flip back" transaction typically involves a temporary change in the ownership or structure of a corporation, which is then reversed or "flipped back" to its original state. This type of transaction may be used in various corporate strategies, including tax planning.

Filing Requirements for Section 382 Election

The need to file a Section 382 election can be triggered by various transactions that result in an ownership change. However, the provided information from the Internal Revenue Bulletins does not specifically address "flip back" transactions in relation to Section 382 elections. Therefore, based on the information provided, it is not possible to definitively conclude whether executing a "flip back" transaction would necessitate the filing of a Section 382 election.

Conclusion

To determine the specific tax implications and filing requirements of a "flip back" transaction, one would need to review the relevant IRC sections, Treasury Regulations, Revenue Rulings, and other authoritative guidance that directly address such transactions and their impact on Section 382 elections. Since the provided information does not contain this level of detail, it is recommended to refer to the most current and applicable tax law and IRS guidance.

For the latest updates and specific guidance on Section 382 and related transactions, reviewing the Internal Revenue Bulletins available at [www.irs.gov/irb/] would be beneficial. Additionally, examining the Treasury Decisions, Revenue Rulings, and Revenue Procedures listed in the bulletins could provide further clarity on this matter.

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Sources:

Internal Revenue Bulletin: 2023-50 2023-12-10

Internal Revenue Bulletin: 2023-27 2023-07-02

Internal Revenue Bulletin: 2023-17 2023-04-23

Internal Revenue Bulletin: 2008-37 2008-09-14

Internal Revenue Bulletin: 2007-34 2007-08-19

Internal Revenue Bulletin: 2006-48 2006-11-26