P10 Industries Inc. (PX)

[Whats a stock]

Further, § 382(c)(1) imposes a continuity of business enterprise requirement for the two years following an Ownership Change. The loss corporation will lose all of its prior accumulated NOLs if, at any point within the two-years following an Ownership Change, the loss corporation fails to do one of the following: (i) continue a significant line of the loss corporation’s historical business, or (ii) use a significant portion of the loss corporation’s historical business assets.

For purposes of calculating this annual limitation, the value of the loss corporation is the value of the loss corporation’s equity (including the value of certain preferred and other stock not considered when determining stock ownership) immediately before the Ownership Change. The value of the loss corporation, however, should not include (i) capital contributions made primarily to decrease the impact of the annual limitation, or (ii) substantial nonbusiness assets (e.g. assets held for investment) exceeding one-third of the total value of the loss corporation’s assets. § 382(l). In addition, capital contributions made within two-years prior to an Ownership Change will be presumptively excluded from this calculation. § 382 (l)(1)(B). Accordingly, when a loss corporation has relatively little value, excluding its NOLs, § 382 serves to significantly reduce the value of the loss corporation’s NOLs to an outside buyer.