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Newcastle Investment Corp. Message Board

  • dgmcpa dgmcpa Nov 9, 2010 4:34 PM Flag

    Tax Loss Carryforward


    Yhe CC indicated tax losses carryforward of Operating 549,000,000 and Capital of
    359,000,000. Based EPS todate and projecting the 4th Qtr with similar results to first 9 months of the year, do you have any thoughts as to when NCT will have positive (taxable) earnings and consequently will have to pay a common dividend.
    I have a fairly large position (long) approx $110,000 basis that is still under water even though I have averaged down. Your analysis is always appreciated.

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    • The problem we have is that while we now know the total tax losses, we do not know the tax gain for 2010 at all (gaap accounting versus tax accounting, all we get is gaap accounting).

      If we look at the language from NCT, they say they "believe that they will not have to pay divvys for this year". So we have to use their language as an important key since they do not say that "we know without a doubt that we won't have to pay a divvy for 2010".

      My guess is that we will use up most of the tax loss this year and next year NCT will have to pay a divvy at some point (could be in one big payment at the end of 2011, or could be in the Q2 to Q3 range).

      Once the books close on 2010 (cc around March 2011) and we see the taxable profit for 2010, then we will know how much there is left.

      • 2 Replies to peter_scott10
      • One other thing to keep in mind - I believe I read that Reits/BDC's will still be able to pay their dividends in 90% stock/10% cash in 2011 to meet their dividend paying requirements. Obviously, this is better than no dividend and you will always have the option of selling your newly granted shares immediately. Maybe someone can verify, or clarify.

      • Very good points. I think you interpertation of their comments is right on he money. I have owned this stock for over 5 yrs. (good time & bad) so I guess waiting another 9 to 12 mos. is big deal. It is my opinion that the survivors of the financial meltdown will not only survive but thrive and prove once again to very good investments. Tnaks again and GLTA longs.

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