Replies to post #352933 on Mr Cooper Group Inc (COOP)

[rainbow1111]

That is not correct zeus. The nol is deducted from the income for the year, then the result is multiplied by the tax rate, 35% for simplicity. In this example, the NOL can be used in 1 year.

Taxable income before NOL 15 million
NOL carryover -10 million
Taxable income after NOL 5 million
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Carrying this further:
Tax on 15 million would be 5.25 million
Tax on 5 million would be -1.75 million
Tax savings due to NOL 3.5 million

Value of 10 million nol is 3.5 million (10 million x 35%)
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Dont' be stubborn. I'm right on this one. LOL

[Civil War General]

Tax is on Capital Gains, NOLs-are-a-write-off-against-gains.

To take advantage of a $10 million NOL (from prior years) you post a $10 million profit (capital gain) this year and thus you made zero profit for tax purposes.

You would have paid 35% tax ($3.5 million) but the $10 million NOL lets you keep that tax payment.

You still made $10 million. That is good.
You just didn't net $6.5 million after tax, you netted the full $10 million. That is very good.

What can't happen is owing $10 million in tax on $28.75 million capital gains profit and taking the $10 million NOL AND thinking you owe zero tax.

Sorry Zeus The IRS will throw Lightning Bolts at you.