Learn more about common financial (and startup) terms here. To learn more about Pilot, fill out the form below.
Section 382 is a provision in the U.S. Internal Revenue Code that limits a corporation's use of Net Operating Loss (NOL) carryforwards after an ownership change. It's designed to prevent "loss trafficking," where companies are bought for their unused tax losses.
Specifically, if a company has an "ownership change" — generally, a shift of more than 50 percentage points in ownership among "5% shareholders" over a three-year period — Section 382 limits the amount of taxable income in future years that can be offset by these NOLs. This can impact the value of startups, particularly those with significant NOLs due to large investments in growth. Founders and early investors need to be aware of Section 382 when planning financing and exit strategies, as it can significantly impact the after-tax return on investment.
Pilot provides bookkeeping, CFO, and tax services for literally thousands of startups and growing businesses. We've successfully processed over 10 million transactions for our customers and have unparalleled expertise when it comes to helping businesses succeed.
We're the largest startup-focused accounting firm in the United States, and we'd love to help you. To talk to an expert on our team and find out what Pilot can do for you, please click "Talk to an Expert" below, or email us at email@example.com.
Get the peace of mind that comes from partnering with our experienced finance team.