Broker- I'm not so sure those NOLs are as valuable as you think? IRS Section 132 comes into play.
I picked up more 46,600 more shares today via BNKPF mostly at .095 cents US and 2,500 shares at .09 cents US.
With tax-loss season upon us one wonders just how low this can go? Anyone buying is hopefully using only monies for which they can afford a total loss.
Good luck to all longs!
Cougar3
The Section 382 Limitation
Since a net operating loss can be used to directly reduce the amount of taxable income, it can be considered a valuable asset. If a business acquires an entity that has an NOL, the reason for doing so should not be the presence of the NOL, for the Internal Revenue Service has placed a restriction on the use of an acquired NOL. The restriction is documented in section 382 of the Internal Revenue Code. Section 382 states that:
-
If there is at least a 50% ownership change in a business that has an NOL,
-
The acquirer can only use that portion of the NOL in each successive year that is based on the long-term tax-exempt bond rate multiplied by the stock of the acquired entity.
Despite this restriction, the presence of a large NOL can impact the price paid by an acquirer to the shareholders of an acquiree, since it impacts the net-of-tax cash flows that an acquirer will derive from the ongoing results of an acquiree.
Section 382 can create a significant problem when a business has large unused NOLs on its books. In these situations, a business that is attempting to gain additional investor funding should avoid any equity offering that could give the appearance of a change in ownership. For example, it could avoid triggering section 382 by issuing non-voting preferred stock that cannot be converted into common stock.