KPMG PPT - Tax Executives Institute, Inc.

Unified Loss Rules
Basis Reduction Rule
Example
Original Asset
Basis Value
$50 $100
P
PIA
$50*
Discon.
$150-($100+$20)=$30
S
NOL
$20
► P purchases S for $100 and they file a C/R, S has $20 NOL carryover (not
absorbed in the C/R throughout the transactions here);
► S sells the asset for $100 while a member of the P group;
► This increases P’s basis in the S stock to $150;
► P sells the stock of S for $100 and sustains a $50 loss;
► P’s basis in the S stock is reduced by $30 immediately before sale.
*Does not take into account tax sharing payment
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