Silm, Let me try to explain this. I don't many understand NOLs.
NOL stands for net operating loss. Net operating losses can offset operating profits(NOP)to reduce taxes. NOLs are not a tax credit.
Let's say AJX company had a net operating loss in 2017 of $1million dollars. In 2018 they have an operating gain (profit) of $1million dollars. Under the old tax law they would be taxed at let's say 39%, or $390,000. Then then would be able to offset the operating profit by the $1 million NOL on the books, reducing their tax bill down to nothing. That saved them $390,000 in taxes they did not have to pay.
Under the new tax table they would be taxed at 20%. Their tax would be 20% of the $1 million, or $200,000. They then apply the same $1mil NOL tax loss to the $1 million NOP, reducing their net operating profit to zero, saving them $200,000.
Under the 39% tax that $1mil NOL saved them $390,000 on their 2018 taxes.
Under the 20% tax that same $1mil NOL saved them just $200,000.
Therefor, the economic book value of the NOL is reduced.
Keep in my the NOL is not reduced. The value of the deferred tax loss is.
Also keep in mind that the NOLs were protected to offset operating gains during liquidation. Under the liquidation plan, the the NOLs have NO economic value once the liquidation is complete.
That is how the documents are written, and that is how the NOLs will be applied by tax law.
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