Jeffrey you put your finger right on it. I was just copying/pasting my backup commands here and saw it.

BACKUP LOG [Database1] TO [Database1Log] WITH INIT , NOUNLOAD , NAME = N'Database1 Log Backup', NOSKIP , STATS = 10, NOFORMAT

I modified by backup plan recently to start running an index defrag job every night instead of once a week and didn't realize I was screwing up my transaction log backups. I must have checked 5 times today but just didn't see it until now.

I'm a bit puzzled now though. How/When do you reinitialize the transaction log backup file ? I can't run backups with NOINIT forever, the file needs to be reset at some point otherwise it's gonna grow forever ?

The only thing I can think of is running a transaction log backup with INIT juste before my full backup but somehow it doesn't sound like "best practice" method. There has to be a more elegant way of handling transaction log backups.