Toll Brothers (NYSE:TOL), Horsham, Pa., after market close Thursday became the latest public home builder to propose a "poison pill" shareholder rights plan to preserve future tax benefits.

The plan, proposed by the board and subject to shareholder approval, would trigger substantial dilution of the company's stock should any entity acquire more than 4.95% of the company's outstanding shares without board approval. In practice, the plan would guard against the triggering of a "change in ownership" under Section 382 of the Internal Revenue Code by routine trading of the company's stock. Under that code, a change in ownership of 50% of the stock over a defined period of time would reduce the net-operating-loss deferred tax assets the company carries on its books.

Toll Brothers has declared a dividend of one right for each share of common stock outstanding as of the close of business on July 17, 2009. After the rights plan took effect yesterday, "any shareholder or group that acquires beneficial ownership of 4.95% or more of Toll Brothers' outstanding stock...without the approval of the company's board of directors could be subject to significant dilution in its holdings." Existing shareholders holding 4.95% or more of Tolls's common stock will not be considered acquiring persons unless they acquire additional shares.

The rights expire on July 16, 2019 or earlier at the discretion of the board or if shareholders do not approve the plan by June 17, 2010.

Toll joins several other public builders in proposing a poison pill to preserve deferred tax assets, including Hovnanian (NYSE:HOV), Centex (NYSE:CTX), Pulte (NYSE:PHM), M/I (NYSE:MHO) and Meritage (NYSE:MTH). Last year, stock movement at Standard Pacific (NYSE:SPF) and Beazer (NYSE:BZH) triggered unintended changes of ownership that limited the tax refunds they can receive from the massive losses they have logged in recent years.