A Warning to Loss Corporations Raising Capital

Corporations need to be aware that issuing stock warrants or convertible debt to raise funds sometimes causes an ownership change under Section 382 of the Internal Revenue Code, which limits the use of net operating losses. Sheryl L. Vander Baan, CPA, and Bonnie B. Koppenol, CPA, explain how to avoid this unfortunate result and retain a corporation’s ability to use these losses.