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Nasdaq:VNDA) reported today that it has received a private letter ruling (PLR) from the Internal Revenue Service (IRS) regarding certain income tax issues associated with the availability of Vanda's net operating loss carryforwards for tax purposes.
In a typical case, the "debtor" issuing the instruments would be a tax-indifferent party that would not be paying taxes currently, owing either to its status as a tax-exempt entity or, in the case of a commercial enterprise, to large tax loss carryforwards.
Loss carryforwards (which are carried to the first S post-disposition tax year); and
Because of the basis increase, the unused loss carryforwards became deductible.
Second, deferred tax liability is determined by multiplying the gross amount of taxable temporary differences by the enacted marginal tax rate, and a deferred tax asset is determined by multiplying gross deductible temporary differences and operating loss carryforwards by the enacted marginal tax rate.
The Company reserves the right to limit the exercise of rights by certain stockholders so as to not jeopardize or endanger the availability of the Company's net operating loss carryforwards under Section 382 of the Internal Revenue Code.
The company's net deferred tax asset represents primarily the estimated tax effect of net operating loss carryforwards.
Ideally, if A had current or suspended capital loss carryforwards, he could use them to offset the capital gain.
Companies reported capital loss carryforwards, foreign tax credits and other potential future tax benefits that require unique types of future taxable income for realization or which have relatively limited carryforward or carryback periods.
Another hurdle is the question of whether a presumptive approach should apply to all future tax benefits--net operating loss carryforwards as well as deductible temporary differences.
The projected increase to income taxes is due to fourth quarter changes in foreign exchange rates that reduce the value of Terra's net operating loss carryforwards.
For consolidated groups with the right fact pattern, this could produce a higher-than-anticipated absorption of net operating loss carryforwards in 1999.