The Merrimack County Superior Court held that the carryback long-term capital losses of one member of a unitary combined group can be used to offset the long-term capital gains of a different member of the group for purposes of computing the group’s Business Profits Tax. The New Hampshire Department of Revenue Administration argued that the group was not allowed to offset because its rule, N.H. Admin. R. Rev. 302.09, required each member of a unitary combined group to compute its gross business profits on an individual basis and did not allow the losses from one member to offset the gains of another member. The court held that the statute that required unitary combined reporting was ambiguous regarding the treatment of capital gains and losses. The legislative history, however, made clear that the purpose of unitary combined reporting was to treat the parent corporation and its subsidiaries as a single taxpayer and to prevent profit shifting across state lines. Thus, unitary combined groups are authorized to net the gains and losses of the group for purposes of computing the group’s gross business profits. The court also held that the rule improperly added and modified the statute, N.H. Rev. Stat. Ann. 77-A:6, IV, which “requires that members of a water’s edge combined to be treated as ‘one business organization.’”

Hologic, Inc. v. Stepp, Dkt. No. 217-2023-CV-282 (N.H. Super. Ct. Feb. 21, 2025).