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Rose Inc. is and accrual-basis, calendar-year corporation with only voting common stock outstanding. On October 19, 2019, it acquired the assets of Nagg Inc. by
Rose Inc. is and accrual-basis, calendar-year corporation with only voting common stock outstanding. On October 19, 2019, it acquired the assets of Nagg Inc. by issuing 3,000 of its voting common shares in a Type A reorganization. Nagg has a $300,000 net operating loss carryover and the value of its stock is $2 million. Roses taxable income for the year of acquisition is $280,000. Assume the long-term tax-exmpt rate is 3 percent.
- What is Roses net operating loss deduction for the year of acquisition assuming that the Sec. 382 limitaion does not apply? For the following year?
- What is Roses net operating loss deduction for the year of acquisition if the Sec. 382 limitation does apply to the acquisition? For the following year?
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