Sears’s Losses Boost Its Value With $1.7 Billion Tax Exception

A buyer of struggling Sears Holdings Corp. may be able to shrink its tax liability by up to $1.7 billion over the course of nearly two decades.

The department store chain holding company, which filed for Chapter 11 bankruptcy on Oct. 15, held as of February $1.7 billion in federal and state deferred tax assets stemming from net operating losses, according to its most recent annual filing, from late March.

Those tax assets—which a company incurs in years when deductible expenses exceed taxable revenue and can be used to offset future tax obligations when the ...