Sec. 382. Limitation on net operating loss carryforwards and
certain built-in losses following ownership change
(a) General rule
The amount of the taxable income of any new loss corporation for
any post-change year which may be offset by pre-change losses shall
not exceed the section 382 limitation for such year.
(b) Section 382 limitation
For purposes of this section -
(1) In general
Except as otherwise provided in this section, the section 382
limitation for any post-change year is an amount equal to -
(A) the value of the old loss corporation, multiplied by
(B) the long-term tax-exempt rate.
(2) Carryforward of unused limitation
If the section 382 limitation for any post-change year exceeds
the taxable income of the new loss corporation for such year
which was offset by pre-change losses, the section 382 limitation
for the next post-change year shall be increased by the amount of
such excess.
(3) Special rule for post-change year which includes change date
In the case of any post-change year which includes the change
date -
(A) Limitation does not apply to taxable income before change
Subsection (a) shall not apply to the portion of the taxable
income for such year which is allocable to the period in such
year on or before the change date. Except as provided in
subsection (h)(5) and in regulations, taxable income shall be
allocated ratably to each day in the year.
(B) Limitation for period after change
For purposes of applying the limitation of subsection (a) to
the remainder of the taxable income for such year, the section
382 limitation shall be an amount which bears the same ratio to
such limitation (determined without regard to this paragraph)
as -
(i) the number of days in such year after the change date,
bears to
(ii) the total number of days in such year.
(c) Carryforwards disallowed if continuity of business requirements
not met
(1) In general
Except as provided in paragraph (2), if the new loss
corporation does not continue the business enterprise of the old
loss corporation at all times during the 2-year period beginning
on the change date, the section 382 limitation for any
post-change year shall be zero.
(2) Exception for certain gains
The section 382 limitation for any post-change year shall not
be less than the sum of -
(A) any increase in such limitation under -
(i) subsection (h)(1)(A) for recognized built-in gains for
such year, and
(ii) subsection (h)(1)(C) for gain recognized by reason of
an election under section 338, plus
(B) any increase in such limitation under subsection (b)(2)
for amounts described in subparagraph (A) which are carried
forward to such year.
(d) Pre-change loss and post-change year
For purposes of this section -
(1) Pre-change loss
The term ''pre-change loss'' means -
(A) any net operating loss carryforward of the old loss
corporation to the taxable year ending with the ownership
change or in which the change date occurs, and
(B) the net operating loss of the old loss corporation for
the taxable year in which the ownership change occurs to the
extent such loss is allocable to the period in such year on or
before the change date.
Except as provided in subsection (h)(5) and in regulations, the
net operating loss shall, for purposes of subparagraph (B), be
allocated ratably to each day in the year.
(2) Post-change year
The term ''post-change year'' means any taxable year ending
after the change date.
(e) Value of old loss corporation
For purposes of this section -
(1) In general
Except as otherwise provided in this subsection, the value of
the old loss corporation is the value of the stock of such
corporation (including any stock described in section 1504(a)(4))
immediately before the ownership change.
(2) Special rule in the case of redemption or other corporate
contraction
If a redemption or other corporate contraction occurs in
connection with an ownership change, the value under paragraph
(1) shall be determined after taking such redemption or other
corporate contraction into account.
(3) Treatment of foreign corporations
Except as otherwise provided in regulations, in determining the
value of any old loss corporation which is a foreign corporation,
there shall be taken into account only items treated as connected
with the conduct of a trade or business in the United States.
(f) Long-term tax-exempt rate
For purposes of this section -
(1) In general
The long-term tax-exempt rate shall be the highest of the
adjusted Federal long-term rates in effect for any month in the
3-calendar-month period ending with the calendar month in which
the change date occurs.
(2) Adjusted Federal long-term rate
For purposes of paragraph (1), the term ''adjusted Federal
long-term rate'' means the Federal long-term rate determined
under section 1274(d), except that -
(A) paragraphs (2) and (3) thereof shall not apply, and
(B) such rate shall be properly adjusted for differences
between rates on long-term taxable and tax-exempt obligations.
(g) Ownership change
For purposes of this section -
(1) In general
There is an ownership change if, immediately after any owner
shift involving a 5-percent shareholder or any equity structure
shift -
(A) the percentage of the stock of the loss corporation owned
by 1 or more 5-percent shareholders has increased by more than
50 percentage points, over
(B) the lowest percentage of stock of the loss corporation
(or any predecessor corporation) owned by such shareholders at
any time during the testing period.
(2) Owner shift involving 5-percent shareholder
There is an owner shift involving a 5-percent shareholder if -
(A) there is any change in the respective ownership of stock
of a corporation, and
(B) such change affects the percentage of stock of such
corporation owned by any person who is a 5-percent shareholder
before or after such change.
(3) Equity structure shift defined
(A) In general
The term ''equity structure shift'' means any reorganization
(within the meaning of section 368). Such term shall not
include -
(i) any reorganization described in subparagraph (D) or (G)
of section 368(a)(1) unless the requirements of section
354(b)(1) are met, and
(ii) any reorganization described in subparagraph (F) of
section 368(a)(1).
(B) Taxable reorganization-type transactions, etc.
To the extent provided in regulations, the term ''equity
structure shift'' includes taxable reorganization-type
transactions, public offerings, and similar transactions.
(4) Special rules for application of subsection
(A) Treatment of less than 5-percent shareholders
Except as provided in subparagraphs (B)(i) and (C), in
determining whether an ownership change has occurred, all stock
owned by shareholders of a corporation who are not 5-percent
shareholders of such corporation shall be treated as stock
owned by 1 5-percent shareholder of such corporation.
(B) Coordination with equity structure shifts
For purposes of determining whether an equity structure shift
(or subsequent transaction) is an ownership change -
(i) Less than 5-percent shareholders
Subparagraph (A) shall be applied separately with respect
to each group of shareholders (immediately before such equity
structure shift) of each corporation which was a party to the
reorganization involved in such equity structure shift.
(ii) Acquisitions of stock
Unless a different proportion is established, acquisitions
of stock after such equity structure shift shall be treated
as being made proportionately from all shareholders
immediately before such acquisition.
(C) Coordination with other owner shifts
Except as provided in regulations, rules similar to the rules
of subparagraph (B) shall apply in determining whether there
has been an owner shift involving a 5-percent shareholder and
whether such shift (or subsequent transaction) results in an
ownership change.
(D) Treatment of worthless stock
If any stock held by a 50-percent shareholder is treated by
such shareholder as becoming worthless during any taxable year
of such shareholder and such stock is held by such shareholder
as of the close of such taxable year, for purposes of
determining whether an ownership change occurs after the close
of such taxable year, such shareholder -
(i) shall be treated as having acquired such stock on the
1st day of his 1st succeeding taxable year, and
(ii) shall not be treated as having owned such stock during
any prior period.
For purposes of the preceding sentence, the term ''50-percent
shareholder'' means any person owning 50 percent or more of the
stock of the corporation at any time during the 3-year period
ending on the last day of the taxable year with respect to
which the stock was so treated.
(h) Special rules for built-in gains and losses and section 338
gains
For purposes of this section -
(1) In general
(A) Net unrealized built-in gain
(i) In general
If the old loss corporation has a net unrealized built-in
gain, the section 382 limitation for any recognition period
taxable year shall be increased by the recognized built-in
gains for such taxable year.
(ii) Limitation
The increase under clause (i) for any recognition period
taxable year shall not exceed -
(I) the net unrealized built-in gain, reduced by
(II) recognized built-in gains for prior years ending in
the recognition period.
(B) Net unrealized built-in loss
(i) In general
If the old loss corporation has a net unrealized built-in
loss, the recognized built-in loss for any recognition period
taxable year shall be subject to limitation under this
section in the same manner as if such loss were a pre-change
loss.
(ii) Limitation
Clause (i) shall apply to recognized built-in losses for
any recognition period taxable year only to the extent such
losses do not exceed -
(I) the net unrealized built-in loss, reduced by
(II) recognized built-in losses for prior taxable years
ending in the recognition period.
(C) Special rules for certain section 338 gains
If an election under section 338 is made in connection with
an ownership change and the net unrealized built-in gain is
zero by reason of paragraph (3)(B), then, with respect to such
change, the section 382 limitation for the post-change year in
which gain is recognized by reason of such election shall be
increased by the lesser of -
(i) the recognized built-in gains by reason of such
election, or
(ii) the net unrealized built-in gain (determined without
regard to paragraph (3)(B)).
(2) Recognized built-in gain and loss
(A) Recognized built-in gain
The term ''recognized built-in gain'' means any gain
recognized during the recognition period on the disposition of
any asset to the extent the new loss corporation establishes
that -
(i) such asset was held by the old loss corporation
immediately before the change date, and
(ii) such gain does not exceed the excess of -
(I) the fair market value of such asset on the change
date, over
(II) the adjusted basis of such asset on such date.
(B) Recognized built-in loss
The term ''recognized built-in loss'' means any loss
recognized during the recognition period on the disposition of
any asset except to the extent the new loss corporation
establishes that -
(i) such asset was not held by the old loss corporation
immediately before the change date, or
(ii) such loss exceeds the excess of -
(I) the adjusted basis of such asset on the change date,
over
(II) the fair market value of such asset on such date.
Such term includes any amount allowable as depreciation,
amortization, or depletion for any period within the
recognition period except to the extent the new loss
corporation establishes that the amount so allowable is not
attributable to the excess described in clause (ii).
(3) Net unrealized built-in gain and loss defined
(A) Net unrealized built-in gain and loss
(i) In general
The terms ''net unrealized built-in gain'' and ''net
unrealized built-in loss'' mean, with respect to any old loss
corporation, the amount by which -
(I) the fair market value of the assets of such
corporation immediately before an ownership change is more
or less, respectively, than
(II) the aggregate adjusted basis of such assets at such
time.
(ii) Special rule for redemptions or other corporate
contractions
If a redemption or other corporate contraction occurs in
connection with an ownership change, to the extent provided
in regulations, determinations under clause (i) shall be made
after taking such redemption or other corporate contraction
into account.
(B) Threshold requirement
(i) In general
If the amount of the net unrealized built-in gain or net
unrealized built-in loss (determined without regard to this
subparagraph) of any old loss corporation is not greater than
the lesser of -
(I) 15 percent of the amount determined for purposes of
subparagraph (A)(i)(I), or
(II) $10,000,000,
the net unrealized built-in gain or net unrealized built-in
loss shall be zero.
(ii) Cash and cash items not taken into account
In computing any net unrealized built-in gain or net
unrealized built-in loss under clause (i), except as provided
in regulations, there shall not be taken into account -
(I) any cash or cash item, or
(II) any marketable security which has a value which does
not substantially differ from adjusted basis.
(4) Disallowed loss allowed as a carryforward
If a deduction for any portion of a recognized built-in loss is
disallowed for any post-change year, such portion -
(A) shall be carried forward to subsequent taxable years
under rules similar to the rules for the carrying forward of
net operating losses (or to the extent the amount so disallowed
is attributable to capital losses, under rules similar to the
rules for the carrying forward of net capital losses), but
(B) shall be subject to limitation under this section in the
same manner as a pre-change loss.
(5) Special rules for post-change year which includes change date
For purposes of subsection (b)(3) -
(A) in applying subparagraph (A) thereof, taxable income
shall be computed without regard to recognized built-in gains
to the extent such gains increased the section 382 limitation
for the year (or recognized built-in losses to the extent such
losses are treated as pre-change losses), and gain described in
paragraph (1)(C), for the year, and
(B) in applying subparagraph (B) thereof, the section 382
limitation shall be computed without regard to recognized
built-in gains, and gain described in paragraph (1)(C), for the
year.
(6) Treatment of certain built-in items
(A) Income items
Any item of income which is properly taken into account
during the recognition period but which is attributable to
periods before the change date shall be treated as a recognized
built-in gain for the taxable year in which it is properly
taken into account.
(B) Deduction items
Any amount which is allowable as a deduction during the
recognition period (determined without regard to any carryover)
but which is attributable to periods before the change date
shall be treated as a recognized built-in loss for the taxable
year for which it is allowable as a deduction.
(C) Adjustments
The amount of the net unrealized built-in gain or loss shall
be properly adjusted for amounts which would be treated as
recognized built-in gains or losses under this paragraph if
such amounts were properly taken into account (or allowable as
a deduction) during the recognition period.
(7) Recognition period, etc.
(A) Recognition period
The term ''recognition period'' means, with respect to any
ownership change, the 5-year period beginning on the change
date.
(B) Recognition period taxable year
The term ''recognition period taxable year'' means any
taxable year any portion of which is in the recognition period.
(8) Determination of fair market value in certain cases
If 80 percent or more in value of the stock of a corporation is
acquired in 1 transaction (or in a series of related transactions
during any 12-month period), for purposes of determining the net
unrealized built-in loss, the fair market value of the assets of
such corporation shall not exceed the grossed up amount paid for
such stock properly adjusted for indebtedness of the corporation
and other relevant items.
(9) Tax-free exchanges or transfers
The Secretary shall prescribe such regulations as may be
necessary to carry out the purposes of this subsection where
property held on the change date was acquired (or is subsequently
transferred) in a transaction where gain or loss is not
recognized (in whole or in part).
(i) Testing period
For purposes of this section -
(1) 3-year period
Except as otherwise provided in this section, the testing
period is the 3-year period ending on the day of any owner shift
involving a 5-percent shareholder or equity structure shift.
(2) Shorter period where there has been recent ownership change
If there has been an ownership change under this section, the
testing period for determining whether a 2nd ownership change has
occurred shall not begin before the 1st day following the change
date for such earlier ownership change.
(3) Shorter period where all losses arise after 3-year period
begins
The testing period shall not begin before the earlier of the
1st day of the 1st taxable year from which there is a
carryforward of a loss or of an excess credit to the 1st
post-change year or the taxable year in which the transaction
being tested occurs. Except as provided in regulations, this
paragraph shall not apply to any loss corporation which has a net
unrealized built-in loss (determined after application of
subsection (h)(3)(B)).
(j) Change date
For purposes of this section, the change date is -
(1) in the case where the last component of an ownership change
is an owner shift involving a 5-percent shareholder, the date on
which such shift occurs, and
(2) in the case where the last component of an ownership change
is an equity structure shift, the date of the reorganization.
(k) Definitions and special rules
For purposes of this section -
(1) Loss corporation
The term ''loss corporation'' means a corporation entitled to
use a net operating loss carryover or having a net operating loss
for the taxable year in which the ownership change occurs.
Except to the extent provided in regulations, such term includes
any corporation with a net unrealized built-in loss.
(2) Old loss corporation
The term ''old loss corporation'' means any corporation -
(A) with respect to which there is an ownership change, and
(B) which (before the ownership change) was a loss
corporation.
(3) New loss corporation
The term ''new loss corporation'' means a corporation which
(after an ownership change) is a loss corporation. Nothing in
this section shall be treated as implying that the same
corporation may not be both the old loss corporation and the new
loss corporation.
(4) Taxable income
Taxable income shall be computed with the modifications set
forth in section 172(d).
(5) Value
The term ''value'' means fair market value.
(6) Rules relating to stock
(A) Preferred stock
Except as provided in regulations and subsection (e), the
term ''stock'' means stock other than stock described in
section 1504(a)(4).
(B) Treatment of certain rights, etc.
The Secretary shall prescribe such regulations as may be
necessary -
(i) to treat warrants, options, contracts to acquire stock,
convertible debt interests, and other similar interests as
stock, and
(ii) to treat stock as not stock.
(C) Determinations on basis of value
Determinations of the percentage of stock of any corporation
held by any person shall be made on the basis of value.
(7) 5-percent shareholder
The term ''5-percent shareholder'' means any person holding 5
percent or more of the stock of the corporation at any time
during the testing period.
(l) Certain additional operating rules
For purposes of this section -
(1) Certain capital contributions not taken into account
(A) In general
Any capital contribution received by an old loss corporation
as part of a plan a principal purpose of which is to avoid or
increase any limitation under this section shall not be taken
into account for purposes of this section.
(B) Certain contributions treated as part of plan
For purposes of subparagraph (A), any capital contribution
made during the 2-year period ending on the change date shall,
except as provided in regulations, be treated as part of a plan
described in subparagraph (A).
(2) Ordering rules for application of section
(A) Coordination with section 172(b) carryover rules
In the case of any pre-change loss for any taxable year
(hereinafter in this subparagraph referred to as the ''loss
year'') subject to limitation under this section, for purposes
of determining under the 2nd sentence of section 172(b)(2) the
amount of such loss which may be carried to any taxable year,
taxable income for any taxable year shall be treated as not
greater than -
(i) the section 382 limitation for such taxable year,
reduced by
(ii) the unused pre-change losses for taxable years
preceding the loss year.
Similar rules shall apply in the case of any credit or loss
subject to limitation under section 383.
(B) Ordering rule for losses carried from same taxable year
In any case in which -
(i) a pre-change loss of a loss corporation for any taxable
year is subject to a section 382 limitation, and
(ii) a net operating loss of such corporation from such
taxable year is not subject to such limitation,
taxable income shall be treated as having been offset first by
the loss subject to such limitation.
(3) Operating rules relating to ownership of stock
(A) Constructive ownership
Section 318 (relating to constructive ownership of stock)
shall apply in determining ownership of stock, except that -
(i) paragraphs (1) and (5)(B) of section 318(a) shall not
apply and an individual and all members of his family
described in paragraph (1) of section 318(a) shall be treated
as 1 individual for purposes of applying this section,
(ii) paragraph (2) of section 318(a) shall be applied -
(I) without regard to the 50-percent limitation contained
in subparagraph (C) thereof, and
(II) except as provided in regulations, by treating stock
attributed thereunder as no longer being held by the entity
from which attributed,
(iii) paragraph (3) of section 318(a) shall be applied only
to the extent provided in regulations,
(iv) except to the extent provided in regulations, an
option to acquire stock shall be treated as exercised if such
exercise results in an ownership change, and
(v) in attributing stock from an entity under paragraph (2)
of section 318(a), there shall not be taken into account -
(I) in the case of attribution from a corporation, stock
which is not treated as stock for purposes of this section,
or
(II) in the case of attribution from another entity, an
interest in such entity similar to stock described in
subclause (I).
A rule similar to the rule of clause (iv) shall apply in the
case of any contingent purchase, warrant, convertible debt,
put, stock subject to a risk of forfeiture, contract to acquire
stock, or similar interests.
(B) Stock acquired by reason of death, gift, divorce,
separation, etc.
If -
(i) the basis of any stock in the hands of any person is
determined -
(I) under section 1014 (relating to property acquired
from a decedent),
(II) section 1015 (relating to property acquired by a
gift or transfer in trust), or
(III) section 1041(b)(2) (relating to transfers of
property between spouses or incident to divorce),
(ii) stock is received by any person in satisfaction of a
right to receive a pecuniary bequest, or
(iii) stock is acquired by a person pursuant to any divorce
or separation instrument (within the meaning of section
71(b)(2)),
such person shall be treated as owning such stock during the
period such stock was owned by the person from whom it was
acquired.
(C) Certain changes in percentage ownership which are
attributable to fluctuations in value not taken into
account
Except as provided in regulations, any change in
proportionate ownership which is attributable solely to
fluctuations in the relative fair market values of different
classes of stock shall not be taken into account.
(4) Reduction in value where substantial nonbusiness assets
(A) In general
If, immediately after an ownership change, the new loss
corporation has substantial nonbusiness assets, the value of
the old loss corporation shall be reduced by the excess (if
any) of -
(i) the fair market value of the nonbusiness assets of the
old loss corporation, over
(ii) the nonbusiness asset share of indebtedness for which
such corporation is liable.
(B) Corporation having substantial nonbusiness assets
For purposes of subparagraph (A) -
(i) In general
The old loss corporation shall be treated as having
substantial nonbusiness assets if at least 1/3 of the value
of the total assets of such corporation consists of
nonbusiness assets.
(ii) Exception for certain investment entities
A regulated investment company to which part I of
subchapter M applies, a real estate investment trust to which
part II of subchapter M applies, or a REMIC to which part IV
of
subchapter M applies, shall not be treated as a new loss
corporation having substantial nonbusiness assets.
(C) Nonbusiness assets
For purposes of this paragraph, the term ''nonbusiness
assets'' means assets held for investment.
(D) Nonbusiness asset share
For purposes of this paragraph, the nonbusiness asset share
of the indebtedness of the corporation is an amount which bears
the same ratio to such indebtedness as -
(i) the fair market value of the nonbusiness assets of the
corporation, bears to
(ii) the fair market value of all assets of such
corporation.
(E) Treatment of subsidiaries
For purposes of this paragraph, stock and securities in any
subsidiary corporation shall be disregarded and the parent
corporation shall be deemed to own its ratable share of the
subsidiary's assets. For purposes of the preceding sentence, a
corporation shall be treated as a subsidiary if the parent owns
50 percent or more of the combined voting power of all classes
of stock entitled to vote, and 50 percent or more of the total
value of shares of all classes of stock.
(5) Title 11 or similar case
(A) In general
Subsection (a) shall not apply to any ownership change if -
(i) the old loss corporation is (immediately before such
ownership change) under the jurisdiction of the court in a
title 11 or similar case, and
(ii) the shareholders and creditors of the old loss
corporation (determined immediately before such ownership
change) own (after such ownership change and as a result of
being shareholders or creditors immediately before such
change) stock of the new loss corporation (or stock of a
controlling corporation if also in bankruptcy) which meets
the requirements of section 1504(a)(2) (determined by
substituting ''50 percent'' for ''80 percent'' each place it
appears).
(B) Reduction for interest payments to creditors becoming
shareholders
In any case to which subparagraph (A) applies, the pre-change
losses and excess credits (within the meaning of section
383(a)(2)) which may be carried to a post-change year shall be
computed as if no deduction was allowable under this chapter
for the interest paid or accrued by the old loss corporation on
indebtedness which was converted into stock pursuant to title
11 or similar case during -
(i) any taxable year ending during the 3-year period
preceding the taxable year in which the ownership change
occurs, and
(ii) the period of the taxable year in which the ownership
change occurs on or before the change date.
(C) Coordination with section 108
In applying section 108(e)(8) to any case to which
subparagraph (A) applies, there shall not be taken into account
any indebtedness for interest described in subparagraph (B).
(D) Section 382 limitation zero if another change within 2
years
If, during the 2-year period immediately following an
ownership change to which this paragraph applies, an ownership
change of the new loss corporation occurs, this paragraph shall
not apply and the section 382 limitation with respect to the
2nd ownership change for any post-change year ending after the
change date of the 2nd ownership change shall be zero.
(E) Only certain stock taken into account
For purposes of subparagraph (A)(ii), stock transferred to a
creditor shall be taken into account only to the extent such
stock is transferred in satisfaction of indebtedness and only
if such indebtedness -
(i) was held by the creditor at least 18 months before the
date of the filing of the title 11 or similar case, or
(ii) arose in the ordinary course of the trade or business
of the old loss corporation and is held by the person who at
all times held the beneficial interest in such indebtedness.
(F) Special rule for certain financial institutions
(i) In general
In the case of any ownership change to which this
subparagraph applies, this paragraph shall be applied -
(I) by substituting ''1504(a)(2)(B)'' for ''1504(a)(2)''
and ''20 percent'' for ''50 percent'' in subparagraph
(A)(ii), and
(II) without regard to subparagraphs (B) and (C).
(ii) Special rule for depositors
For purposes of applying this paragraph to an ownership
change to which this subparagraph applies -
(I) a depositor in the old loss corporation shall be
treated as a stockholder in such loss corporation
immediately before the change,
(II) deposits which, after the change, become deposits of
the new loss corporation shall be treated as stock of the
new loss corporation, and
(III) the fair market value of the outstanding stock of
the new loss corporation shall include the amount of
deposits in the new loss corporation immediately after the
change.
(iii) Changes to which subparagraph applies
This subparagraph shall apply to -
(I) an equity structure shift which is a reorganization
described in section 368(a)(3)(D)(ii) (FOOTNOTE 1) (as
modified by section 368(a)(3)(D)(iv)), (FOOTNOTE 1) or
(FOOTNOTE 1) See References in Text note below.
(II) any other equity structure shift (or transaction to
which section 351 applies) which occurs as an integral part
of a transaction involving a change to which subclause (I)
applies.
This subparagraph shall not apply to any equity structure
shift or transaction occurring on or after May 10, 1989.
(G) Title 11 or similar case
For purposes of this paragraph, the term ''title 11 or
similar case'' has the meaning given such term by section
368(a)(3)(A).
(H) Election not to have paragraph apply
A new loss corporation may elect, subject to such terms and
conditions as the Secretary may prescribe, not to have the
provisions of this paragraph apply.
(6) Special rule for insolvency transactions
If paragraph (5) does not apply to any reorganization described
in subparagraph (G) of section 368(a)(1) or any exchange of debt
for stock in a title 11 or similar case (as defined in section
368(a)(3)(A)), the value under subsection (e) shall reflect the
increase (if any) in value of the old loss corporation resulting
from any surrender or cancellation of creditors' claims in the
transaction.
(7) Coordination with alternative minimum tax
The Secretary shall by regulation provide for the application
of this section to the alternative tax net operating loss
deduction under section 56(d).
(8) Predecessor and successor entities
Except as provided in regulations, any entity and any
predecessor or successor entities of such entity shall be treated
as 1 entity.
(m) Regulations
The Secretary shall prescribe such regulations as may be
necessary or appropriate to carry out the purposes of this section
and section 383, including (but not limited to) regulations -
(1) providing for the application of this section and section
383 where an ownership change with respect to the old loss
corporation is followed by an ownership change with respect to
the new loss corporation, and
(2) providing for the application of this section and section
383 in the case of a short taxable year,
(3) providing for such adjustments to the application of this
section and section 383 as is necessary to prevent the avoidance
of the purposes of this section and section 383, including the
avoidance of such purposes through the use of related persons,
pass-thru entities, or other intermediaries,
(4) providing for the application of subsection (g)(4) where
there is only 1 corporation involved, and
(5) providing, in the case of any group of corporations
described in section 1563(a) (determined by substituting ''50
percent'' for ''80 percent'' each place it appears and determined
without regard to paragraph (4) thereof), appropriate adjustments
to value, built-in gain or loss, and other items so that items
are not omitted or taken into account more than once.