Although we don't believe in timing the market or panicking over market movements, we do like to keep an eye on big changes -- just in case they're material to our investing thesis.

What: Shares of office supply specialist Office Depot (NYSE: ODP) were getting shredded today, losing as much as 18% in intraday trading on heavy volume.

So what: It was a pretty ugly news day for Office Depot. The company announced that the Internal Revenue Service has denied the company's use of certain tax losses. The decision will require the company to restate some of its 2010 filings, which, for the full year, will result in net earnings of $33 million being reversed to a $46 million net loss. The IRS decision will also wipe out a $63 million tax receivable that will impact cash flow this year.

Now what: The tax change doesn't impact Office Depot's operating results from 2010 and, other than the cash flow impact, won't creep into 2011. However, in the company's press release it also confirmed that sales in the first quarter were down roughly 3% from last year, and estimated that EBIT dropped about 50%. It's been a rocky few years for Office Depot and it doesn't look like it's turning around quickly.

Want to keep up to date on Office Depot? Add it to your watchlist.

                                                           

Office Depot is a Motley Fool Big Short short-sale recommendation. Motley Fool Alpha LLC has opened a short position on Office Depot. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors.

Fool contributor Matt Koppenheffer does not have a financial interest in any of the companies mentioned. You can check out what Matt is keeping an eye on by visiting his CAPS portfolio, or you can follow Matt on Twitter @KoppTheFool or on his RSS feed. The Fool's disclosure policy prefers dividends over a sharp stick in the eye.