### Question
Can you define what recognized built-in loss means?


### Answer
**Recognized built-in loss** is defined as the following in *26 U.S.C. § 382*:

> any loss recognized during the recognition period on the disposition of any asset except to the extent the new loss corporation establishes that—



(i) such asset was not held by the old loss corporation immediately before the change date, or



(ii) such loss exceeds the excess of—



(I) the adjusted basis of such asset on the change date, over



(II) the fair market value of such asset on such date

#### Citation:
  - *26 U.S.C. § 382*
  - Heading: **Subtitle A-Income Taxes > CHAPTER 1-NORMAL TAXES AND SURTAXES > Subchapter C-Corporate Distributions and Adjustments > PART V-CARRYOVERS**

