Laura's Design Corporation has $400,000 in tax loss carryforwards. Vandenbosch Investment Consulting, a firm in the 40% tax bracket, would be willing to pay (on a nondiscounted basis) the sum of ______________ for the carryforward alone.

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Quizplus · Accepted Answer

Since Vandenbosch Investment Consulting is in the 40% tax bracket, they could use the tax loss carryforwards to offset their taxable income and save 40% of the carryforward amount in taxes. Therefore, they would be willing to pay up to $160,000 ($400,000 x 40%) for the carryforward alone.

Laura's Design Corporation Has $400,000 in Tax Loss Carryforwards