What happens to NOL c/f when client files bankruptcy

[schirallicpa]

And Sec 179 not used, for that matter.

Client has significant NOL that I believe he can continue to carry.  (Wasn't that Trump's method of avoiding tax?)  But does it matter what type of bankruptcy they use?  

And should I maximize 179 and let that carry forward?  That doesn't seem right at all since he will be abandoning the property and allowing the bank to take it back.  Including equipment that he just purchased this past year.  But, if NOL stays, can 179?

 

[Abby Normal]

It's been awhile since I've done one, but the gist is that tax attributes (loss carryovers, asset basis, etc.) are reduced by the amount of debt cancelled in a bankruptcy. See for 982.

[jklcpa]

Re: the 179, you can't create a loss with it, and you don't take depreciation at all on an asset that is bought & sold in the same year. I think your client wouldn't take any depreciation against that which is abandoned.