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meghanjackson

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tT
发表于 2011-7-13 14:02 | 只看该作者

acquiring NOLs (rant)

acquired, companies, countries, buying
I would just like to post another rant (which will probably be deleted by the mods again) about errors in the CFA curriculum.

This nonsense about acquiring NOLs is good for the buyer is complete rubbish. Most major countries have tax law that prevents companies from using acquired NOLs. If it were legal, GE or other perverted financial engineering houses would go around buying up dead/bankrupt companies full of NOLs all day long. But they can't, because there is no way to fully use the NOLs. They get a teeny-tiny portion of the NOL (about $5000 USD per year). You can't really get use out of it. It's against IRS law.

This is basically Corporate Tax Law 101. But of course the CFA curriculum doesn't acknowledge reality...

 

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Newhuman

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2#
发表于 2011-7-13 14:02 | 只看该作者
Yea the IRS law is that the NOL is void if an ownership change occurs. And if am not wrong, the ownership change is said to have occured if i own 5% in a company and take it to 7.5% i.e a 50% increase in stake by a shareholder who owns more than 5%.

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sameeragarwal

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3#
发表于 2011-7-13 14:02 | 只看该作者
what is NOL?

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jacksparrow

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4#
发表于 2011-7-13 14:02 | 只看该作者
It's like if there's a firm making losses, u go and buy that firm and get tax credits for the losses. Thats an NOL acquisition. CFAI says its one rationale for acquisition.

Not very important. Dont worry.

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MiniMe7

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5#
发表于 2011-7-13 14:02 | 只看该作者
net operating loss i suppose

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spreads

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6#
发表于 2011-7-13 14:02 | 只看该作者
I guess the CFAI looks at it from a global perspective. Im sure some countries permit this. Tax laws are ridiculus; in the US you can buy discounted tax credits but cant buy NOLs. Go figure.

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