The Celluloid Collar Corporation has $210,000 in tax loss carryforwards. The Bowstring Shirt Company, a firm in the 30% tax bracket, would be willing to pay (on a non-discounted basis) the sum of ______________ for the carryforward alone.

Question

Quizplus · Accepted Answer

The value of tax loss carryforwards is equal to the amount of the carryforward multiplied by the tax rate of the firm that would benefit from using it. In this case, the value would be $210,000 x 0.30 = $63,000. Therefore, the Bowstring Shirt Company would be willing to pay $63,000 for the carryforward alone.

The Celluloid Collar Corporation Has $210,000 in Tax Loss Carryforwards