![](https://investorshub.advfn.com/uicon/297907.png?cb=1535105654)
Wednesday, August 30, 2023 9:19:50 PM
Here's my understanding of how it works. The vast majority of American corporations are profitable. With time, a line item in their balance sheets (one of several financial statements which is reported quarterly, to the SEC) called 'retained earnings', shows the cumulative earnings of the corporation. Since Lordstown Motors isn't (and hasn't been) profitable, they have a large balance in an account called 'Accumulated Deficit'. This account houses cumulative losses, and had a balance of more than $1.1 billion as of the balance sheet dated June 30, 2023. Tax loss carryforwards act as an asset, which serves to reduce future income tax liabilities. This $1.1 billion in cumulative losses could serve to reduce the tax liabilities of an acquirer of Lordstown Motors assets, to the tune of several hundred million dollars. For example, a corporation with an effective tax rate of 25% could save more than $250 million dollars in future income tax liabilities if they were to acquire $1 billion in tax loss carryforwards. I'm not well versed in the limitations, and qualifications, but it does serve as a valuable asset for any qualifying acquirer of such an asset.
That is my understanding, and I've seen companies benefit from acquiring such an asset (and have seen them pay dearly for them). This could affect the perceived value of the assets of Lordstown Motors, and therefore the share price.
As always, simply my opinion.
RIDEQ
Recent NRDE News
- Form 10-Q - Quarterly report [Sections 13 or 15(d)] • Edgar (US Regulatory) • 08/13/2024 08:31:25 PM
- Form 4 - Statement of changes in beneficial ownership of securities • Edgar (US Regulatory) • 05/16/2024 12:28:04 AM
- Form 10-Q - Quarterly report [Sections 13 or 15(d)] • Edgar (US Regulatory) • 05/14/2024 08:48:59 PM
FEATURED Element79 Gold Corp Announces 2024 Clover Work Plans & Nevada Portfolio Updates • Sep 10, 2024 11:00 AM
North Bay Resources Announces Mt. Vernon Gold Mine Bulk Sample, Sierra County, California • NBRI • Sep 11, 2024 9:15 AM
One World Products Issues Shareholder Update Letter • OWPC • Sep 11, 2024 7:27 AM
Kona Gold Beverage Inc. Reports $1.225 Million in Revenue and $133,000 Net Profit for the Quarter • KGKG • Sep 10, 2024 1:30 PM
Nightfood Holdings Inc. Completes Major Step on Uplist Journey by Closing Strategic All-Stock Acquisition of CarryoutSupplies.com • NGTF • Sep 10, 2024 8:15 AM
Element79 Gold Corp. Announces Sale of 100% Interest in Elder Creek, North Mill Creek, and Elephant Projects to 1472886 B.C. Ltd. • ELEM • Sep 9, 2024 9:34 AM