What is the amount of NOL that Sinopia may use

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Problem - Sinopia completed a corporate restructuring transaction with Cyan on May 31 of the current year. Cyan distributed 30% of Sinopia's stock to its shareholders in exchange for all of their stock in Cyan. At the completion of the reorganization, Cyan's assets were worth $900,000, its liabilities were $350,000, and it held an NOL carryover of $207,674. The applicable Federal long-term tax-exempt rate is 3%, and Sinopia is in the 25% state and Federal income tax bracket.

What is the amount of NOL that Sinopia may use in the current year? What is the net present value of the NOL carried forward to future years? Sinopia earns a 6% after-tax rate of return. Prepare your solution using spreadsheet software such as Microsoft Excel. Hint: Use text Appendix F in your analysis.

Reference no: EM132647031

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