---
name: tax-attribute-utilization-analyzer
description: "Evaluates a target or combined entity's tax attributes (NOLs, tax credits, capital loss carryforwards) and applies Section 382/383 limitation logic to estimate usable value over a projection horizon. Produces annual limitation calculations, RBIG/RBIL adjustments, a year-by-year utilization schedule, expiration risk flags, and a present-value estimate of usable attributes. Use when modeling the after-tax value of a target's tax attributes in an acquisition, quantifying the impact of an ownership change on NOL usability, or building a diligence-grade attribute utilization schedule for deal or purchase-price negotiation."
argument-hint: "[target-attributes] [ownership-change]"
allowed-tools: ["Read"]
---

# Tax Attribute Utilization Analyzer

## Purpose
Quantify how much of a target's or combined entity's tax attributes can actually be used after an ownership change — applying Section 382/383 limitations, RBIG/RBIL adjustments, and expiration mechanics — and translate that into a present-value estimate that informs purchase price, deal structure, and post-close tax planning. Turns a raw pile of NOLs and credits into a defensible, year-by-year usable-value schedule.

## When to Use
Invoke this skill when the user asks to:
- Estimate the usable value of a target's NOLs, credits, or capital loss carryforwards in an acquisition
- Model the Section 382/383 limitation impact of an ownership change on a target's attributes
- Build a diligence-grade tax attribute utilization schedule for a deal
- Quantify how much attribute value survives to inform purchase-price negotiation or a gross-up
- Compare attribute usability across alternative deal structures (stock vs. asset, ownership change vs. none)
- Assess expiration risk on carryforwards over a projection horizon

## Inputs Required
Before starting, collect:
- **Attribute inventory**: Balances by type and vintage year — federal NOLs (pre-2018 vs. post-2017), state NOLs, general business credits, AMT credits (if any), foreign tax credits, capital loss carryforwards — with generation and expiration years
- **Ownership change facts**: Whether the transaction triggers a Section 382 ownership change (>50 percentage-point shift among 5% shareholders), the change date, and any prior known ownership changes
- **Section 382 inputs**: Target's equity value at the change date (the loss corporation's value immediately before the change) and the applicable long-term tax-exempt rate (adjusted federal long-term rate)
- **Built-in gain/loss position**: Whether the loss corporation is in a Net Unrealized Built-In Gain (NUBIG) or Net Unrealized Built-In Loss (NUBIL) position, and its estimated amount if known
- **Taxable income projection**: Projected pre-attribute taxable income of the combined/surviving entity by year over the horizon
- **Projection horizon and rates**: Number of years to model (default 10), applicable corporate tax rate (default 21% federal), and a discount rate for present-value (default 10%)
- **Structure and jurisdiction notes**: Stock vs. asset deal, whether a Section 338 election is contemplated, and states where attributes exist and matter

If built-in gain/loss position, prior ownership changes, or the long-term tax-exempt rate are not provided, state the assumption used (e.g., current published rate, no NUBIG/NUBIL adjustment) and flag it as a variable to confirm with the deal's tax advisors.

## Instructions

### Step 1: Inventory and Classify the Attributes
Build a clean attribute table before any limitation math:
- List each attribute by **type**, **vintage year**, **balance**, and **statutory expiration**
- Flag the **80% taxable-income limitation** on post-2017 federal NOLs (indefinite life, capped at 80% of taxable income) vs. pre-2018 NOLs (20-year life, no 80% cap)
- Separate **Section 382-limited attributes** (pre-change losses, credits, capital losses, and RBILs) from attributes generated after the change date (unlimited)
- Note which attributes are subject to **Section 383** (credits and capital losses run through the 382 limitation after NOLs)
- Flag any attributes near expiration within the horizon

### Step 2: Determine Whether an Ownership Change Occurred
- Confirm whether the transaction crosses the **>50 percentage-point** threshold among 5% shareholders over the testing period (generally 3 years)
- If **no ownership change**: attributes are unlimited by 382 — model straight utilization against projected income (skip to Step 5) but still check the 80% NOL cap and expiration
- If **ownership change**: proceed to Step 3 to compute the annual limitation
- Note the **continuity of business enterprise (COBE)** requirement — the loss corporation must continue its historic business or use a significant portion of its assets for 2 years post-change, or the 382 limitation drops to zero

### Step 3: Compute the Base Section 382 Limitation
Apply the core formula:

**Annual Base 382 Limitation = Loss Corporation Equity Value at Change Date × Long-Term Tax-Exempt Rate**

- Use the equity value **immediately before** the ownership change (adjust for any capital contributions made to inflate value — anti-stuffing rule)
- Multiply by the published long-term tax-exempt rate for the change month
- This produces the **annual dollar amount** of pre-change NOLs (and, via 383, credits/capital losses) that can offset income each year
- Apply the **short-year proration** in the year of the change (limitation × days remaining / 365)

### Step 4: Apply RBIG / RBIL Adjustments
Adjust the base limitation for built-in items over the **recognition period (5 years post-change)**:
- If the loss corporation is in a **NUBIG position** (built-in gains exceed the threshold — lesser of $10M or 15% of asset FMV): the annual limitation is **increased** by recognized built-in gains (RBIG) during the recognition period
- If in a **NUBIL position**: recognized built-in losses (RBILs) are **treated as pre-change losses** and subjected to the 382 limitation
- Note which safe-harbor approach is assumed (**338 approach** vs. **1374 approach**) — these produce materially different RBIG figures; default to the 1374 approach and flag the choice
- Model any **unused limitation carryforward**: if the limitation exceeds usable income in a year, the excess adds to the next year's limitation

### Step 5: Build the Year-by-Year Utilization Schedule
For each year in the horizon, in this order:
1. Start with projected pre-attribute taxable income
2. Apply the **382 limitation ceiling** (base + RBIG + carried-forward unused limitation) as the cap on pre-change NOL usage
3. Apply the **80% NOL cap** on post-2017 NOLs against remaining income
4. Utilize NOLs first (oldest eligible first, respecting the limitation), then apply **Section 383** ordering for credits and capital losses against remaining limitation capacity
5. Track remaining balance by attribute and vintage
6. Flag any attribute that **expires unused** in that year

Produce a table with columns: Year | Projected Taxable Income | 382 Limitation | NOL Used | Credits/Cap Losses Used | Tax Saved | Attribute Balance Remaining.

### Step 6: Estimate Present Value of Usable Attributes
- Convert each year's utilized attributes into **tax dollars saved** (NOLs × tax rate; credits at face value)
- Discount each year's tax savings to present value at the discount rate
- Sum to a **total PV of usable attributes**
- Compute the **haircut**: usable PV vs. gross face value of attributes × tax rate — this is the number that drives negotiation
- Separate **usable vs. stranded** value (attributes that expire before they can be absorbed)

### Step 7: Summarize Findings and Sensitivities
- State usable value in dollars and as a percentage of gross attribute value
- Identify the binding constraint (382 limitation, 80% cap, income shortfall, or expiration)
- Provide a **sensitivity table** on the 2-3 highest-leverage variables (equity value at change, projected income, discount rate)
- Recommend structuring or timing levers where relevant (e.g., 338(h)(10) trade-off, deferring the change date, RBIG optimization)

## Output Format
- **Structure**: Narrative diagnosis followed by structured tables — attribute inventory table, 382 limitation calculation, year-by-year utilization schedule, PV summary, and a sensitivity table
- **Length**: 1,000–1,400 words plus tables
- **Format**: Structured analytical document with tables for all numeric schedules; prose for methodology, assumptions, and recommendations
- **Sections**: Attribute Inventory → Ownership Change Determination → 382 Base Limitation → RBIG/RBIL Adjustments → Year-by-Year Utilization Schedule → PV of Usable Attributes → Findings & Sensitivities → Assumptions & Flags
- **Tone**: Tax director in a diligence setting — precise, citation-aware, conservative on assumptions, explicit about what requires advisor confirmation

## Quality Checklist
Before delivering output, verify:
- [ ] The 382 base limitation is computed explicitly (equity value × long-term tax-exempt rate) with the rate and value shown
- [ ] Post-2017 NOLs are treated with the 80% cap and indefinite life; pre-2018 NOLs with 20-year life and no cap — not lumped together
- [ ] The utilization schedule respects both the 382 ceiling and the 80% cap in every year, with ordering (NOLs, then 383 credits/capital losses) applied correctly
- [ ] Every attribute is tracked to either full utilization or a flagged expiration — none are silently dropped
- [ ] The PV figure and the haircut vs. gross face value are stated in dollars and as a percentage
- [ ] Every material assumption (LTTER, NUBIG/NUBIL, RBIG approach, projected income) is explicitly listed and flagged as advisor-confirmable

## Notes
- This analysis is a decision-support model, not a tax opinion — always flag that the final 382 study, ownership testing, and RBIG/RBIL position require confirmation by the deal's qualified tax advisors
- The single most common error is applying the 80% NOL cap to pre-2018 NOLs — vintage classification drives materially different results, so keep the two pools separate
- The 382 limitation is a *ceiling on usage per year*, not a reduction of the attribute balance — unused limitation from low-income years can carry forward and matters greatly for lumpy income projections
- When comparing structures, remember that an asset deal or 338(h)(10) election generally leaves target attributes behind with the seller — model whether the buyer is actually acquiring the attributes at all before valuing them
- NUBIG positions can *increase* usable value substantially via RBIG; if the target holds appreciated assets, this is often the difference between a large haircut and near-full utilization

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## How to use this skill

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