Black Corporation Has a Net Worth of $500,000 and an NOL

question 34

Essay

Black Corporation has a net worth of $500,000 and an NOL of $200,000.The majority shareholder (owns 90%)would like to sell all of her stock as she thinks the corporation is not a good investment.The minority shareholder believes that he can turn the company around in five years and is willing to buy a majority interest.It is important to the minority shareholder that the ability to use the NOL is not limited in anyway.Suggest a method for the minority shareholder to acquire the majority's stock and avoid any § 382 limitation.

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Definitions:

Simple Interest

Interest calculated on the principal sum only, not compounding on earned interest, typically over a period of time.

Savings Account

A bank account that earns interest over time, designed for the deposit of funds not intended for immediate use.

Discounted

The reduction applied to the face value or current price of an item or financial instrument, taking into account factors such as time, interest rate, and risk.

Rate of Return

The profit or deficit from an investment during a certain timeframe, represented as a portion of the investment's starting price in percentage terms.