United States Tax Court
HBM Holdings Company
July 27, 2026
Summary
The Tax Court granted the Commissioner partial summary judgment, holding that Delavau Holdings, LLC — a disregarded entity deemed to liquidate into HBM in a section 332 liquidation on June 30, 2018 — was a 'predecessor' of HBM under Treas. Reg. § 1.1502-1(f)(4) even though the HBM consolidated group did not come into existence until July 1, 2018. Because the lonely parent rule of Treas. Reg. § 1.1502-1(f)(2)(i) does not reach the separate return years of a predecessor of the common parent, Delavau's roughly $108 million of NOL carryovers arose in separate return limitation years; and because HBM had no separate-entity taxable income and the founding members were not an SRLY subgroup, the group's CNOL deductions for the 2018 short year, 2020, and 2021 were properly disallowed. The court also rejected petitioner's contentions that section 381 rendered the succeeded carryovers indistinguishable from HBM's own NOLs and that common control made the founding members an SRLY subgroup as a matter of economic reality.