How would you account for NOLs in an M&A deal?
- Apply the entire NOL balance against current-year taxable income with no annual usage cap
- Recognize the full NOL balance as immediate revenue in the year the deal closes
- Treat the NOLs as expiring at close, since a change of control always cancels a target's losses outright
- Use them to shelter future taxable income, subject to the Section 382 annual limit, and value them as a DTA
- Book the NOLs as a deferred tax liability, because carried-forward losses represent a future obligation to the IRS
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