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Loss, Interest Expense Limits Complicate Deal Negotiations

Tax Notes Today

30 Aug 2018

The Tax Cuts and Jobs Act provision, which eliminates NOL carrybacks and restricts loss carryforwards, is “definitely affecting the ways in which some buyers and sellers are approaching certain deal terms,” said Morrison & Foerster partner David Strong in the Tax Notes Today article, “Loss, Interest Expense Limits Complicate Deal Negotiations.”

Prior to the provision, Mr. Strong noted that target companies, for example, would want to be paid for “any tax benefits that might result from deal-related transaction expenses that could be effectively carried back as an NOL to the prior two taxable years.” This could sometimes create a “readily quantified” refund that could be returned to the seller.

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