How much of the Border NOL can be utilized in current year

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Problem - Through an acquisitive "Type D" reorganization, Border, Inc., is merged into Collie Corporation on September 2 of the current calendar tax year. The Federal long-term tax-exempt rate for September is 3%. Border shareholders receive 70% of the Collie stock in exchange for all of their Border shares. Border liquidates immediately after the exchange. At the time of the merger, Border was worth $1,000,000 and held a $500,000 NOL.

If Collie reports taxable income of $400,000 for the current year, how much of the Border NOL can be utilized in the current year? How much of the Border NOL may Collie utilize next year if its taxable income remains the same?

Reference no: EM132647018

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