Skylar Corporation has suffered losses for several$$ years, and its debts total $ $495$ comma $000$; Skylar$\text{'}$s assets are valued at only $ $375$ comma $000.$ Skylar$\text{'}$s creditors agree to reduce Skylar$\text{'}$s debts by$$ one$-$half in order to permit the corporation to continue to operate. Skylar$\text{'}$s NOL carryover is $ $165$ comma $000.$

Requirements

a$.$

What impact does the reduction in debt have on Skylar$\text{'}$s $$NOL$?$

b$.$

Is Skylar required to report any$$ income?

Question content area bottom

Part $1$

Requirement a$.$ What impact does the reduction in debt have on Skylar$\text{'}$s $$NOL$?$

The total debt reduction is

The debt reduction due to insolvency is

The NOL carryover

The NOL carryover after the debt reduction will be

Part $2$

Requirement b$.$ Is Skylar required to report any$$ income?

Old will report income of

This is because