Replies to post #517646 on Mr Cooper Group Inc (COOP)

[jerrylev]

Say Bbanbop, the entire market was wrong when it sold off WMIH which tanked from 3-4 dollars to 70 cents when the tax cut news came out.

[hotmeat]

Yes you did err. This calculation shows how NOLS apply. The only exception is how they were generated in this case........



Net operating losses can be used to reduce future tax payments. For example, let's assume Company XYZ has taxable income of $1,000,000 and tax deductions of $1,300,000. Its net operating loss is $1,000,000 - $1,300,000 = - $300,000.

Company XYZ will probably not have to pay taxes that year (because it didn't have any taxable income). But let's assume that next year, Company XYZ makes a lot more money and records $500,000 of taxable income.

If Company XYZ is taxed at a corporate tax rate of 40%, it would need to pay $500,000 x 40% = $200,000 in taxes. But because it incurred an NOL last year, it can apply that NOL to this year's tax bill, reducing it significantly (or even to $0, depending on the jurisdiction Company XYZ is in). Company XYZ could also carry the NOL "back" and apply it against taxable income in preceding years.

[gg4]

There is more to this merger IMO. We will see it soon. IMO