The New Hampshire Supreme Court issued a ruling on August 26, 2026, concerning the tax treatment of capital losses for Hologic, Inc. and its subsidiaries. The court's decision affects how combined business groups can apply capital loss carrybacks to offset capital gains. This ruling is significant for businesses operating in New Hampshire and could influence their tax liabilities moving forward.
The case, Hologic, Inc. v. Comm'r, N.H. Dep't of Revenue Admin. (Docket No. 2025-0240), began when Hologic, a Delaware corporation with its headquarters in Massachusetts, sought to carry back a capital loss from 2020 to offset gains from 2017. The New Hampshire Department of Revenue Administration (DRA) rejected this request, leading to a legal battle over the interpretation of the state's business profits tax law.
Hologic, Inc. is the parent company of several affiliated businesses that file a combined tax return as a water's edge combined group under New Hampshire law. The dispute arose during an audit of Hologic's tax returns for the fiscal years ending in 2017 and 2018. The DRA proposed an adjustment that denied Hologic's request to carry back a capital loss incurred by one group member to offset another member's capital gain. Hologic filed an amended tax return seeking a refund based on this carryback, but the DRA ultimately issued a notice of assessment denying the request.
After the DRA upheld its decision, Hologic appealed to the New Hampshire Superior Court. The trial court ruled in favor of Hologic, stating that the law allowed for such a carryback. The DRA then appealed this decision to the New Hampshire Supreme Court.
The Supreme Court ruled against Hologic, reversing the trial court's decision. The court stated, "Under RSA chapter 77-A, capital losses incurred by a member of a water’s edge combined group may offset only that member’s own capital gains." This ruling clarifies that capital losses cannot be used to offset gains from different members of the combined group, emphasizing the need for each member to calculate its net income separately before combining them.
The ruling was made by Justice Donovan, with concurrence from Justices Countway, Gould, and Will. Chief Justice MacDonald participated in the oral argument but did not vote on the final decision.
This ruling has important implications for businesses operating in New Hampshire. It reinforces the idea that each member of a combined group must handle capital gains and losses independently, which could lead to higher tax liabilities for some companies. The court's interpretation may affect how businesses strategize their tax planning and reporting in the future.
Going forward, businesses in New Hampshire should be aware that they cannot rely on capital losses from one member of a combined group to offset gains from another. This ruling sets a clear precedent that could influence similar cases in the future. It also emphasizes the importance of understanding the nuances of state tax laws, especially for companies with complex structures.
As for the possibility of an appeal, the court's ruling is final unless a motion for rehearing is filed under Rule 22. There are no related cases pending that could directly affect this ruling, but businesses may seek to adapt their tax strategies in light of this decision.