Impact of Tax Reform on Financially Distressed Companies: Operating and Restructuring Challenges
New NOL Rules, Limitations on Business Interest Deductibility, Restrictions on Foreign Subsidiary Debt Guarantees
Recording of a 110-minute CPE webinar with Q&A
This course will provide corporate tax executives and advisers with a practical guide to the challenges presented to distressed companies by the 2017 tax reform law's new NOL and business interest limitations. The panel will discuss the distinctions between pre- and post-2018 NOLs and strategies for maximizing the value of those different attributes, detail how the interest deduction cap fits into a scenario of the distressed or heavily leveraged company, and consider some of the critical issues that distressed companies with foreign operations will face under tax reform.
Outline
- Prior NOL and business interest deductibility
- New net operating loss rules
- Elimination of NOL carryback for losses generated in 2018 or later
- New 80% NOL offset limitation
- Increased value of pre-2018 NOLs
- New limitations on business interest deductibility under Section 163(j)
- Treatment of foreign subsidiary debt guarantees
- Planning opportunities for financially distressed companies
Benefits
The panel will discuss these and other relevant topics:
- How the elimination of the NOL carryback could impact distressed companies in the event of a significant market downturn
- How the 80% limitation on the use of NOL carryforwards can result in an effective minimum tax rate for businesses with insufficient current-year losses
- How to address the business interest income limitations under 163(j), particularly in light of the extensive proposed regulations released on November 26, 2018
- Impact of new expensing provisions on distressed companies
- How the changes to Section 956 impact potential debt collateral packages
- Certain problems posed by the new international tax rules for distressed companies, including how those rules interact with existing NOLs
Faculty
Anthony Vincenzo Sexton
Partner
Kirkland & Ellis
Mr. Sexton's practice focuses on the tax aspects of complex business transactions and reorganizations, with a... | Read More
Mr. Sexton's practice focuses on the tax aspects of complex business transactions and reorganizations, with a primary focus on the tax considerations relevant to distressed companies and their creditors in out-of-court workouts and bankruptcy reorganizations. He spent two years as a restructuring associate before transitioning to Kirkland’s tax group.
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Howard B. Steinberg
Partner-In- Charge US Tax Restructuring and Corporate Recovery
KPMG
Mr. Steinberg specializes in providing tax restructuring advisory. He has advised numerous debtor corporations on the... | Read More
Mr. Steinberg specializes in providing tax restructuring advisory. He has advised numerous debtor corporations on the tax aspects of debt restructuring. Mr. Steinberg has provided tax structuring and due diligence services to strategic and financial clients in connection with acquisitions of highly leveraged companies.
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