Reference no: EM133258404

Albert Corporation ("Albert") is a profitable publicly traded corporation. None of its shareholders ownsmore than 1% of its outstanding shares. On December 31, 2009, Albert exchanges $8 million of its stock for all the stock of Turner Corporation ("Turner") as part of a merger. Turner is owned by Tara, who receives a total of 15% of the Albert stock issued and outstanding as part of the reorganization. Tara owned none of the Albert stock before the merger. Turner accumulated $2.5 million in net operating loss carryovers beforemerging into Albert. Albert expects to earn $1 million and $1.5 million in taxable income during 2010 and 2011, respectively. Assume the long-term tax- exempt federal rate for all relevant periods is 4.5%.

Discuss whether and why Albert's use for federal income tax purposes of the Turner NOLs may or may not be limited by any applicable provisions of the Internal Revenue Code of 1986, as amended.