Disposition of carryover net operating loss in the final corporate tax return

[Naveen Mohan from New York]

I have a client with three shareholder C corporation. One of the shareholder is leaving so they have decided to close the existing corporation and start a brand new C corporation in order to have a clear delineation of liabilities and obligation.

 

My problem is that existing C corporation has NOL in all three years of its existence. so there is a sizeable build of NOL in this corporation.

 

Since a C corporation is not a pass through entity what happens to this NOL. Does it completely lapse or do shareholders accrue any benefit out of it.

 

Thanks for your help.

 

Naveen Mohan   

[jklcpa]

The NOL dies with the dissolution of the old C corp. It doesn't affect shareholders' basis or pass through, it just goes away.

[kcjenkins]

They should seriously reconsider their rather emotional decision.  A corp is not affected by who owns it's stock.  Advise them that it should not cost as such to get an attorney to review the situation and draw up a contract between them as it will cost to disolve one and start another, even without the NOL loss.