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Strategies & Market Trends : Value Investing

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To: jeffbas who wrote (13643)	1/11/2002 9:33:08 AM
From: Bob Rudd	Read Replies (1) of 78958

Jeff Bash, Welcome back. On the general issue of tax loss carryforwards, you wrote <<The NOL's have small practical CURRENT (discounted) value, since the rules as to the speed with which they can be taken mean that they have to be taken evenly over 20+ years. Furthermore, I recall (but am not sure) that the amount that an acquirer can take is limited to no more than the purchase price for the company>> Would it be correct that the PV is low for firm that now has them since it can't effectively use them until it becomes profitable...and that may take awhile, so the value of the NOL is discounted possibly at a high cost of capital? Would it also be correct that a profitable acquiror could use the loss to immediatly offset profits with the limitation that the loss didn't exceed the purchase price? Or is there some per year limit that necessarily turns the NOL tax benefits into a series of future flows no matter how profitable the acquiror? Thanks in advance, Bob

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