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Ask Lane Your Own Question
Category: Tax
Satisfied Customers: 12023
Experience:  Law Degree, specialization in Tax Law and Corporate Law, CFP and MBA, Providing Financial & Tax advice since 1986
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I have an Illinois LLC that has a large NOL carryover in

Customer Question

I have an Illinois LLC that has a large NOL carryover in which I am the only member and it is member managed. I also have a Florida LLC also in which I am the only member and it is member managed. If I only want to retain my Florida LLC, to preserve my IL LLC's NOL carryover, it is preferable to MERGE the IL LLC into the FL LLC or CONVERT the IL LLC into a FL LLC, or is the net effect as it relates to keeping my NOL alive does it matter?
Submitted: 1 year ago.
Category: Tax
Expert:  Lane replied 1 year ago.



Becasue NOL's for sole proprietors and suingle member LLC's are really a personal NOL (said differently, an NOL that flows to the personal return, the yes... you are spot on ... als long as these are disregared entities (single member LLC) then from a tax perspective haw you do this doesn't really matter.


Now, if you sell to or merge with an entity with different owmners, there ARE restrictions. Under I.R.C § 382 (“§ 382”), following an “Ownership Change,” a loss corporation’s use of its NOLs to offset taxable income is limited.


This is done to prevent what IRS calls NOL trafficking.

Expert:  Lane replied 1 year ago.

Please let me know if you have any questions at all.


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Thank you!


I have a law degree, (Juris Doctorate), with concentration in Tax Law, Estate law & Corporate law, an MBA, with specialization in financial accounting & tax, a BBA, and CFP & CRPS designations, as well - I’ve been providing financial, Social Security/Medicare, estate, corporate, non-profit, and tax advice, since 1986