Section 382 Statement Example: Required Items and Filing

A Section 382 statement example starts with a prescribed heading and delivers three required facts: the dates of the transactions that produced an ownership change, the date of the change itself, and the amount of net operating losses and other attributes carried by the loss corporation. Treasury Regulation § 1.382-11(a) sets that floor. In practice, a usable statement runs well beyond it, because the IRS relies on the attachment to verify the annual limitation the corporation will claim on every return that follows.¹

The Prescribed Title

The statement is not an IRS form. It is a written attachment to the loss corporation’s income tax return, and it must carry a specific heading:

STATEMENT PURSUANT TO § 1.382-11(a) BY [NAME AND EIN OF TAXPAYER], A LOSS CORPORATION.

That exact title, with the taxpayer’s name and EIN filled in, tells the examiner what they are looking at and locks the filing to the correct regulatory hook.¹

The Three Items the Regulation Requires

Section 1.382-11(a) explicitly demands only these:

The dates of any owner shifts, equity structure shifts, or other transactions during the testing period that contributed to the ownership change.
The date on which the ownership change occurred.
The amount of NOL carryforwards and other tax attributes that made the corporation a loss corporation.

That is the entire mandatory list on the face of the regulation.¹ A statement that stops there is technically compliant. It is also thin enough to invite questions.

What a Well-Prepared Statement Actually Contains

Beyond the required three items, most preparers include the working papers behind the limitation, so the return tells its own story before an examiner asks. A complete statement typically adds:

An ownership analysis showing each 5-percent shareholder’s percentage before and after the change and how the more-than-50-percentage-point threshold was crossed during the testing period.
The calculated Section 382 limitation for the first post-change year, with the inputs used to derive it.
The value of the loss corporation immediately before the ownership change, and any reductions taken for capital contributions or substantial non-business assets.
The long-term tax-exempt rate applied, identified by the month of the change and the source revenue ruling.
A disclosure of any net unrealized built-in gain (NUBIG) or net unrealized built-in loss (NUBIL), whether the statutory threshold was crossed, and the methodology used.
Any elections being made on the statement.

None of that supporting detail is spelled out in § 1.382-11(a). Including it is the difference between a statement that documents a position and one that only asserts it.

The Limitation Calculation the Statement Documents

The Section 382 limitation caps how much of the pre-change NOLs the corporation can use in each post-change year. The formula is the fair market value of the loss corporation’s stock immediately before the change, multiplied by the long-term tax-exempt rate.²

Value of the Loss Corporation

Value means the fair market value of all the corporation’s stock, including Section 1504(a)(4) preferred stock, immediately before the ownership change. If a redemption or corporate contraction occurred in connection with the change, value is determined after that transaction. Two anti-abuse reductions belong in the statement whenever they apply:

Capital contributions received as part of a plan to avoid or inflate the limitation are excluded from value. Any contribution made during the two-year period ending on the change date is presumed to be part of such a plan unless the taxpayer can rebut it.²

Substantial non-business assets trigger a separate haircut. If at least one-third of the corporation’s asset value consists of assets held for investment rather than used in an active business, value is reduced by the fair market value of those assets minus the non-business share of corporate debt. Regulated investment companies, REITs, and REMICs are exempt, and a parent looks through subsidiary stock to test the underlying assets.²

Long-Term Tax-Exempt Rate

The rate is the highest adjusted federal long-term rate from the three-month period ending with the month of the ownership change. The IRS publishes it monthly. For January 2026 the rate was 3.51%,³ and for March 2026 it was 3.58%.⁴ A $50 million loss corporation whose ownership change occurs in March 2026 would carry an annual limitation of $1,790,000. The rate is locked at the change date and does not float with later publications.

Built-In Gains and Losses

The baseline can be adjusted for a NUBIG or NUBIL. The figure equals the aggregate fair market value of the corporation’s assets minus their aggregate adjusted basis immediately before the change, excluding cash, cash equivalents, and marketable securities whose value does not substantially differ from basis.² The amount is treated as zero unless it exceeds the lesser of $10 million or 15 percent of the fair market value of the corporation’s assets just before the change.⁵ When the threshold is met, recognized built-in gains during the five-year recognition period increase that year’s limitation, and recognized built-in losses are treated as pre-change losses subject to it. The statement should disclose the amount, the threshold conclusion, and the methodology.

Unused Limitation Carryforward

Unused limitation in one year rolls into the next.² The change-year statement is where that running total begins, so it needs to establish the starting point cleanly for every subsequent return.

Elections That Must Appear on the Statement

Two elections are made only on the § 1.382-11(a) statement. Neither has a separate form, and neither can be made later through another mechanism.

The closing-of-the-books election under Treasury Regulation § 1.382-6(b) lets the corporation allocate income and loss between the pre-change and post-change portions of the change year by actually closing its books on the change date, rather than using a daily ratable allocation. The election is made by including this exact language on the statement: THE CLOSING-OF-THE-BOOKS ELECTION UNDER § 1.382-6(b) IS HEREBY MADE WITH RESPECT TO THE OWNERSHIP CHANGE OCCURRING ON [DATE]. It is irrevocable, and it must be filed by the due date of the change-year return, including extensions.⁶

The option disregard election under Treasury Regulation § 1.382-2T(h)(4)(vi)(B) applies when an option was treated as exercised for testing purposes and the actual exercise occurred within 120 days of the ownership change. The corporation can elect to disregard the deemed exercise, and the election is made on the § 1.382-11(a) statement.¹

Continuity of Business Enterprise

If the new loss corporation does not continue the old loss corporation’s business enterprise at all times during the two-year period beginning on the change date, the Section 382 limitation is zero, and none of the pre-change NOLs can be used.² The regulation does not require the statement to address COBE, but documenting the intent and plan to continue the business creates a contemporaneous record if the IRS raises the question later.

Attributes Beyond NOLs

Section 382 governs NOL carryforwards. Section 383 extends parallel limitations to excess tax credits, net capital loss carryforwards, and disallowed business interest carryforwards under Section 163(j).² A statement that lists only NOLs and ignores a capital loss carryforward or a general business credit sets up an unpleasant reconciliation years later. Identify every affected attribute in the initial filing.

Where and When to File

The statement is attached to the loss corporation’s income tax return, Form 1120 for a C corporation, for the taxable year in which the ownership change occurred.¹ For a calendar-year corporation, that return is due April 15 of the following year. Form 7004 provides an automatic six-month extension to October 15.

Keep permanent records of everything behind the numbers: the ownership analysis, any valuation report, the built-in gain or loss computation, and the revenue ruling supplying the long-term tax-exempt rate. Every post-change return has to reflect the limitation, track how much of the pre-change NOLs have been used, and carry any unused capacity forward. If a return claims more than the limitation allows, the excess is disallowed and the entire calculation can be reopened.

1
eCFR. 26 CFR 1.382-11 – Reporting Requirements
2
Office of the Law Revision Counsel. 26 U.S. Code 382 – Limitation on Net Operating Loss Carryforwards and Certain Built-in Losses Following Ownership Change
3
Internal Revenue Service. Revenue Ruling 2026-2
4
Internal Revenue Service. Revenue Ruling 2026-6
5
Internal Revenue Service. IRS Notice 2003-65 – Built-in Gains and Losses Under Section 382(h)
6
eCFR. 26 CFR 1.382-6 – Allocation of Income and Loss to Periods Before and After the Change Date for Purposes of Section 382