107. Loss Utilisation Following Purchase Of A Corporate Shell

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1. Current corporate loss carryforward provisions

The 1990 Tax Reform Act repealed the previous five year time limit for use of loss carryforwards and permitted net operating losses to be carried forward indefinitely for income, corporation, and trade tax purposes. For income and corporation tax purposes, the indefinite carryforward applied to losses which could not be carried back to either of the two years preceding that in which they were incurred. The trade tax has no loss carryback provision.

In part in reaction to a recent development in the case law and in part out of general fear that the ability to carry losses forward without time limit might invite trafficking in loss carryforwards attached to corporate shells, the legislature also added a new provision to the corporation tax law in 1990 which provided that a