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July 12, 2023

Final regulations address split-waiver elections for consolidated NOL carrybacks

In final regulations (TD 9977) on split-waiver elections, the IRS permits consolidated groups to waive carry back of consolidated net operating losses (CNOLs) that are attributable to an acquired member to pre-acquisition years during which the acquired member was a member of a former consolidated group.

The final regulations allow the acquiring consolidated group to access its own carryback tax years while simultaneously preventing a carryback to tax years of the acquired member (which would, for example, generate a refund payable to the original consolidated group). Two distinct elections are contemplated: an amended statute split-waiver election and an extended split-waiver election.

These split-waiver provisions are unchanged from earlier proposed regulations (Tax Alert 2020-1775) and temporary regulations (Tax Alert 2020-1745), which were issued to address the retroactive statutory extension of the NOL carryback period in the Coronavirus Aid, Relief, and Economic Security Act (CARES Act).

The final regulations apply to CNOLs arising in a tax year ending after July 2, 2020, but can be applied to any CNOLs arising in a tax year beginning after December 31, 2017.


The final regulations are effectively ministerial, finalizing what post-CARES Act guidance in the form of temporary regulations had contemplated for taxpayers that were precluded from waiving carrybacks of CNOLs when the CARES Act subsequently changed the NOL carryback provisions. Under the final regulations, for example, a calendar-year consolidated group that acquired a subsidiary in early 2018 from another consolidated group may waive carryback of that portion of the 2018 CNOL attributable to the acquired subsidiary.

Given the current state of carryback law — most NOLs cannot be carried back — the elections contemplated by the final regulations have more limited relevance to current tax years. But the final regulations reflect forward thinking by the government and are not limited to CARES Act changes: acquisitive consolidated groups may find the elections announced in these regulations useful at some future point if Congress once again broadens the NOL carryback provision or extends the NOL carryback period through a series of successive amendments.


Contact Information
For additional information concerning this Alert, please contact:
National Tax M&A Group - International Tax and Transaction Services
   • Donald Bakke (
   • Brian Peabody (

Published by NTD’s Tax Technical Knowledge Services group; Andrea Ben-Yosef, legal editor