Opinion ID: 197524
Heading Depth: 4
Heading Rank: 1

Heading: Net Operating Losses

Text: 22 Mathias valued Anson's $5 million net operating loss (NOL) at approximately $1,267,000. Of course, an NOL carryforward may have potential value to the taxpayer (viz., Anson) if it can be used to offset future taxable income. 5 Mathias conceded, however, that his inclusion of the NOL carryforward as an Anson asset was inconsistent, since an NOL normally cannot be transferred, with certain exceptions inapplicable here (e.g., a change in the ownership of a corporate taxpayer through qualified stock acquisitions). Thus, the Anson NOL carryforward would have been valueless to a third-party purchaser at foreclosure. 23 Mathias, on the other hand, included the $1,267,000 NOL in tallying Anson assets on the theory that the Fleet foreclosure extinguished Anson's future right to utilize the NOL, thereby effectively destroying the asset. The Mathias thesis is beside the point, however, since the appraisal was designed to determine the value of Fleet's security interest in Anson's assets at the date of foreclosure (i.e., the value Fleet might reasonably expect to realize were the assets sold and applied to the Anson debt), not the value of the NOL while Anson continued to function as a going concern. Thus, Mathias effectively conceded that the value of the Fleet security interest in the NOL was zero. 24