NOL Calc

Question 0

B. How much, in present value ATAX $, are the NET incremental tax benefits from stepping up the tax basis of the targets assets worth?

Answer 0

1. Calc ADSP (P+L+35% * (ADSP - net basis - NOL)
2. Calc tax cost : ADSP - net basis - NOLs * 35%
3. Calc tax benefit (ADSP - net basis) / amortization years
4. Calc tax on tax benefit (#3 * 35%)
5. Calc PV: #4 * PV (amort years, discount)
6. # 5 - #2

Question 1

A. How much, in present value after-tax dollars, are the tax savings associated with preserving the target NOLs worth?

Answer 1

1. Price * LT tax exempt rate = amount per year
2. NOLs/ amount per year = years
3. Amount per year * corp tax rate
4. # 3 * PV (using Years and discount)
5. NOLs - (amount per year * years)
6. # 5 * corp tax rate
7. # 6 * PV (10%, year after exp). FIRST Table!!!
8. Add #4 + #7

Question 2

C. Should the acquirer make a 338?

Answer 2

Yes, if there is a net tax benefit

Question 3

D. How much better off is the acquirer if it selects the correct tax benefit?

Answer 3

Compare net tax benefit (part b) to part a answer

Question 4

E) at what approx federal long term tax exempt date on targets NOLs equivalent?

Answer 4

1. Price * random % (say 9%) = year
2. NOL / year = amount per year
3. Amount per year * 35%
4. # 3 * PV (amort year, discount rate)
5. Amount per year * year
6. NOL - #5
7. # 6 * 35%
8. # 7 * PV (year after, discount rate)
9. # 8 + #4

Question 5

NOLs expire before years are up?

Answer 5

Don’t calculate anything after PV of first 12 years

Question 6

Calc tax costs

Answer 6

ADSP - net basis - NOLs * 35%

Question 7

Calc tax benefits

Answer 7

ADSP - net basis / amortization years

Question 8

Net benefit

Answer 8

Tax benefit * 35%* PV (amort, discount) less the tax cost!!!

Question 9

NOL calc steps

Answer 9

1. ADSP
2. Tax cost
3. Tax benefit
4. Net tax benefit