Freeze Company developed a specialized banking application software program that it licenses to various financial

institutions through multiple-year agreements. On January 1, 2018, these licensing agreements have a fair value of $870,000 and represent Freeze’s sole asset. Although Freeze currently has no liabilities, the company has a $150,000 net operating loss (NOL) carryforward because of recent operating losses.

On January 1, 2018, Ivy, Inc., acquired all of Freeze voting stock for $1,100,000. Ivy expects to extract operating synergies by integrating Freeze’s software into its own products. Ivy also hopes that Freeze will be able to receive a future tax reduction from its NOL. Assume an applicable federal income tax rate of 35 percent

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