When applying the § 382 limitation to deductible losses and credits, the § 382 limit first is applied to capital loss carryovers and then to NOLs.

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The § 382 limitation is applied first to capital loss carryovers and then to NOLs because capital loss carryovers are considered to be more valuable than NOLs. This is because capital loss carryovers can be used to offset capital gains, which are taxed at a lower rate than ordinary income. NOLs, on the other hand, can only be used to offset ordinary income.

When Applying the § 382 Limitation to Deductible Losses and Credits