Tax Court allows split NOL election for Apache’s specified liability losses
Apache Corp. v. Commissioner, No. 25984-22, 165 T.C. No. 11 (U.S. Tax Court, Nov. 13, 2025).
The Tax Court holds that a consolidated group can waive the standard 2-year net operating loss (NOL) carryback under §172(b)(3) while still keeping the 10-year carryback for the portion of the NOL that is a specified liability loss (SLL) under §172(b)(1)(C) and §172(f).
This lets Apache carry SLLs back 10 years while carrying the rest of its 2016 and 2017 NOLs only forward.
Holding
The court holds that §172(b)(1) provides separate “carryback periods” for different types of losses within a single NOL, including SLLs.
A taxpayer that has multiple carryback periods in the same year may elect under §172(b)(3) to relinquish one carryback period without relinquishing the others.
Apache’s elections validly waived only the 2-year carryback for its “normal” NOL while preserving the 10-year carryback for the SLL portions of its 2016 and 2017 NOLs.
Apache’s motion for partial summary judgment is granted, and the Commissioner’s cross-motion is denied.
Why It Matters
Confirms that §172(b)(3) elections…
