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In September 2008, the IRS changed tax laws to allow banks toutilize the tax loss carryfor

In September 2008, the IRS changed tax laws to allow banks toutilize the tax loss carryfor

In September 2008, the IRS changed tax laws to allow banks toutilize the tax loss carryforwards of banks they acquire to shieldtheir future income from taxes (prior law restricted the ability ofacquirers to use these credits). Suppose Fargo Bank acquires CoviaBank and with it acquires $76 billion in tax loss carryforwards. IfFargo Bank is expected to generate taxable income of 11 billion peryear in the future, and its tax rate is 30%, what is the presentvalue of these acquired tax loss carryforwards given a cost ofcapital of 8%

Abhinav 03-Dec-2019

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