Tax Court Holds NOL Attribute Reduction Must Be Treated On A Consolidated Basis

The Tax Court ruled in Marvel Entertainment LLC et al. v. Commissioner (145 T.C. No. 2) that the Marvel Entertainment consolidated group must reduce its entire consolidated net operating loss (CNOL) by the total cancellation of indebtedness (COD) income that four group members excluded from gross income. Marvel had taken the "separate entity" approach in applying the excluded COD income to reduce its CNOL on facts that predated the promulgation of consolidated COD income regulations under Treas. Reg. Sec. 1.1502-28T that now require the single-entity approach.

The...