That’s a consolidated reporting  NOL, per Judge Ruwe, and you can read all about it in Marvel Entertainment, LLC, 145 T. C. 2, filed 7/21/15.

Marvie’s predecessor consolidati filed Chapter 11, and blew off some debt, giving it COD. Taking a short year, some members didn’t recognize the COD, but reduced their NOLs pro rata, per Seciton 108(b)(2)(A).

IRS says no, you can’t split up the Consolidated Net Operating Loss (CNOL), it’s all-in.

Judge Ruwe crystallizes: “Whether the NOL to be reduced under section 108(b)(2)(A) is the entire CNOL or an allocable portion of the CNOL is the sole issue for resolution in this case..” 145 T. C. 2, at p. 14.

IRS says the Supremes decided this years ago, in United Dominion Industries, 532 US 822 (2001).

Marvie says no, got nothing to do with that.

Judge Ruwe: “The Court explained portions of the consolidated return regulations pertaining to consolidated taxable income and CNOL as follows: ‘Under Treas. Regs. §§1.1502-11(a) and 1.1502-21(f), an affiliated group’s “consolidated taxable income” (CTI), or, alternatively, its “consolidated net operating loss” (CNOL), is determined by “taking into account” several items. The first is the “separate taxable income” (STI) of each group member. A member’s STI (whether positive or negative) is computed as though the member were a separate corporation (i.e., by netting income and expenses), but subject to several important “modifications.” Treas. Reg. § 1.1502- 12. These modifications require a group member calculating its STI to disregard, among other items, its capital gains and losses, charitable-contribution deductions, and dividends-received deductions. Ibid. These excluded items are accounted for on a consolidated basis, that is, they are combined at the level of the group filing the single return, where deductions otherwise attributable to one member (say, for a charitable contribution) can offset income received by another (from a capital gain, for example). Treas. Regs. §§ 1.1502-11(a)(3) to (8); 1.1502-21(f)(2) to (6). A consolidated group’s CTI or CNOL, therefore, is the sum of each member’s STI, plus or minus a handful of items considered on a consolidated basis.” United Dominion, 532 U.S. at 826.

I am reminded of Thomas Hobbes’ famous remark in Chapter VIII of Leviathan (1651): “When men write whole volumes of such stuffe, are they not Mad, or intend to make others so?”

I’ll try plain English. There’s only consolidated NOL for consolidati, nothing else. Ya can’t mix-and-match.

But if this sort of thing is really what does it for you (in which case I can but shrug my shoulders), you can read all 36 pages of Judge Ruwe’s exposition of the foregoing.