Section 382: Limitation on net operating loss carryforwards and certain built-in losses following ownership change
Internal Revenue Code
§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.
(1) In general
Except as otherwise provided in this section, the section 382 limitation for any post-change year is an amount equal to—
(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—
(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—
(B) any increase in such limitation under subsection (b)(2) for amounts described in subparagraph (A) which are carried forward to such year.
(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.
(3) Application to carryforward of disallowed interest
The term "pre-change loss" shall include any carryover of disallowed interest described in section 163(j)(2) under rules similar to the rules of paragraph (1).
(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.
(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—
(B) such rate shall be properly adjusted for differences between rates on long-term taxable and tax-exempt obligations.
(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—
(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.
(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
(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.
(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.
(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) 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—
(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—
(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—
(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—
(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).
(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) 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.
(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—
(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—
(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
(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.
(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.
(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).
(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)).
(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.
(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. Such term shall include any corporation entitled to use a carryforward of disallowed interest described in section 381(c)(20). Except to the extent provided in regulations, such term includes any corporation with a net unrealized built-in loss.
(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).
(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
(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.
(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).
(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—
(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.
(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.
(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) except as provided in regulations, by treating stock attributed thereunder as no longer being held by the entity from which attributed,
(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.
(III) section 1041(b)(2) (relating to transfers of property between spouses or incident to divorce),
(iii) stock is acquired by a person pursuant to any divorce or separation instrument (within the meaning of section 121(d)(3)(C)),
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.
(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) 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—
(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.
(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) 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).
(G) 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.
(1) In general
The limitation contained in subsection (a) shall not apply in the case of an ownership change which is pursuant to a restructuring plan of a taxpayer which—
(A) is required under a loan agreement or a commitment for a line of credit entered into with the Department of the Treasury under the Emergency Economic Stabilization Act of 2008, and
(B) is intended to result in a rationalization of the costs, capitalization, and capacity with respect to the manufacturing workforce of, and suppliers to, the taxpayer and its subsidiaries.
(2) Subsequent acquisitions
Paragraph (1) shall not apply in the case of any subsequent ownership change unless such ownership change is described in such paragraph.
(A) In general
Paragraph (1) shall not apply in the case of any ownership change if, immediately after such ownership change, any person (other than a voluntary employees' beneficiary association under section 501(c)(9)) owns stock of the new loss corporation possessing 50 percent or more of the total combined voting power of all classes of stock entitled to vote, or of the total value of the stock of such corporation.
(ii) Related persons
For purposes of clause (i), a person shall be treated as related to another person if—
(Aug. 16, 1954, ch. 736,
Editorial Notes
References in Text
The Emergency Economic Stabilization Act of 2008, referred to in subsec. (n)(1)(A), is div. A of
Amendments
2017—Subsec. (d)(3).
Subsec. (k)(1).
Subsec. (l)(3)(B)(iii).
2014—Subsec. (l)(5)(F) to (H).
2009—Subsec. (n).
2004—Subsec. (l)(4)(B)(ii).
1996—Subsec. (l)(4)(B)(ii).
1993—Subsec. (l)(5)(C).
"(i)
"(ii)
1989—Subsec. (h)(3)(B)(i).
Subsec. (h)(6)(B).
Subsec. (h)(6)(C).
Subsec. (l)(3)(B)(i)(III).
Subsec. (l)(3)(C).
Subsec. (l)(3)(C)(ii).
Subsec. (l)(3)(D).
Subsec. (l)(5)(F).
1988—Subsec. (e)(2).
Subsec. (e)(3).
Subsec. (g)(1)(A).
Subsec. (g)(1)(B).
Subsec. (g)(4)(C).
Subsec. (h)(1)(C).
"(i) the amount of such gain, over
"(ii) the portion of such gain taken into account in computing recognized built-in gains for such taxable year."
Subsec. (h)(3)(A)(ii).
Subsec. (h)(3)(B)(ii).
Subsec. (h)(4).
Subsec. (h)(5)(A).
Subsec. (h)(6).
Subsec. (h)(9).
Subsec. (i)(3).
Subsec. (k)(1).
Subsec. (k)(2).
"(A) which (before the ownership change) was a loss corporation, or
"(B) with respect to which there is a pre-change loss described in subsection (d)(1)(B)."
Subsec. (l)(3)(A)(iv), (v).
Subsec. (l)(3)(C)(ii).
Subsec. (l)(4)(B)(ii).
Subsec. (l)(5)(A)(ii).
Subsec. (l)(5)(B).
Subsec. (l)(5)(C).
Subsec. (l)(5)(E).
Subsec. (l)(5)(F).
Subsec. (l)(5)(F)(i)(I).
Subsec. (l)(5)(F)(ii)(III).
Subsec. (l)(5)(F)(iii)(I).
Subsec. (l)(6).
Subsec. (l)(8).
Subsec. (m)(4).
Subsec. (m)(5).
1987—Subsec. (g)(4)(D).
Subsec. (h)(2)(B).
1986—
1984—Subsec. (b)(1).
1981—Subsec. (b)(7).
1980—Subsec. (b)(7).
1976—
1964—Subsec. (a)(3).
Statutory Notes and Related Subsidiaries
Effective Date of 2017 Amendment
Amendment by section 11051(b)(3)(F) of
Amendment by section 13301(b)(2), (3) of
Effective Date of 2014 Amendment
Amendment by
Effective Date of 2009 Amendment
Effective Date of 2004 Amendment
Amendment by
Effective Date of 1996 Amendment
Amendment by
Effective Date of 1993 Amendment
Amendment by
Effective Date of 1989 Amendment
Amendment by section 7205(a) of
Amendment by sections 7811(c)(5)(A) and 7815(h) of
Effective Date of 1988 Amendment
Amendment by section 1006(d)(2)–(10), (18)–(27), (29), (t)(22)(A) of
"(1)
"(2)
Effective Date of 1987 Amendment
"(1)
"(2)
Effective Date of 1986 Amendment; Savings Provisions
"(1)
"(A)
"(i)
"(ii)
"(B)
"(i) section 382(a) of the Internal Revenue Code of 1954 (as in effect before the amendment made by subsection (a) and the amendments made by section 806 of the Tax Reform Act of 1976 [section 806 of
"(ii) section 382(b) of such Code (as so in effect) shall not apply to any reorganization occurring pursuant to a plan of reorganization adopted after December 31, 1986.
In no event shall sections 382(a) and (b) of such Code (as so in effect) apply to any ownership change described in subparagraph (A).
"(C)
"(2)
"(A)
"(B)
"(i) If a taxpayer described in clause (ii) elects to have the provisions of this subparagraph apply, the amendments made by subsections (e) and (f) of section 806 of the Tax Reform Act of 1976 [amending this section and
"(ii) A taxpayer is described in this clause if the taxpayer filed a title 11 or similar case on December 8, 1981, filed a plan of reorganization on February 5, 1986, filed an amended plan on March 14, 1986, and received court approval for the amended plan and disclosure statement on April 16, 1986.
"(C)
"(i) the amendments made by subsections (a), (b), and (c) shall not apply to any debt restructuring of such debt which was approved by the debtor's Board of Directors and the lenders in 1986, and
"(ii) the amendments made by subsections (e) and (f) of section 806 of the Tax Reform Act of 1976 shall not apply to such debt restructuring, except that the amendment treated as part of such subsections under section 59(b) of the Tax Reform Act of 1984 (relating to qualified workouts) shall apply to such debt restructuring.
"(D)
"(3)
"(A) May 6, 1986, or
"(B) in the case of an ownership change which occurs after May 5, 1986, and to which the amendments made by subsections (a), (b), and (c) do not apply, the first day following the date on which such ownership change occurs.
"(4)
"(A) stock-for-debt exchanges and stock sales made pursuant to a plan of reorganization with respect to a petition for reorganization filed by a corporation under
"(B) ownership change of a Delaware corporation incorporated in August 1983, which may result from the exercise of put or call option under an agreement entered into on September 14, 1983, but only with respect to taxable years beginning after 1991 regardless of when such ownership change takes place.
Any regulations prescribed under section 382 of the Internal Revenue Code of 1986 (as added by subsection (a)) which have the effect of treating a group of shareholders as a separate 5-percent shareholder by reason of a public offering shall not apply to any public offering before January 1, 1989, for the benefit of institutions described in section 591 of such Code. Unless the corporation otherwise elects, an underwriter of any offering of stock in a corporation before September 19, 1986 (January 1, 1989, in the case of an offering for the benefit of an institution described in the preceding sentence), shall not be treated as acquiring any stock of such corporation by reason of a firm commitment underwriting to the extent the stock is disposed of pursuant to the offering (but in no event later than 60 days after the initial offering).
"(5)
"(6)
"(A) the acquisition of a corporation the stock of which is acquired pursuant to a plan of divestiture which identified such corporation and its assets, and was agreed to by the board of directors of such corporation's parent corporation on May 17, 1985,
"(B) a merger which occurs pursuant to a merger agreement (entered into before September 24, 1985) and an application for approval by the Federal Home Loan Bank Board was filed on October 4, 1985,
"(C) a reorganization involving a party to a reorganization of a group of corporations engaged in enhanced oil recovery operations in California, merged in furtherance of a plan of reorganization adopted by a board of directors vote on September 24, 1985, and a Delaware corporation whose principal oil and gas producing fields are located in California, or
"(D) the conversion of a mutual savings and loan association holding a Federal charter dated March 22, 1985, to a stock savings and loan association pursuant to the rules and regulations of the Federal Home Loan Bank Board.
"(7)
"(A) on July 16, 1986, at least 40 percent of the outstanding common stock (excluding all preferred stock, whether or not convertible) of such carrier had been acquired by a parent corporation incorporated in March 1980 under the laws of Delaware, and
"(B) the acquisition (by or for such parent corporation) or retirement of the remaining common stock of such carrier is completed before the later of March 31, 1987, or 90 days after the requisite governmental approvals are finally granted,
but only if the ownership change occurs on or before the later of March 31, 1987, or such 90th day. The aggregate reduction in tax for any taxable year by reason of this paragraph shall not exceed $10,000,000. The testing period for determining whether a subsequent ownership change has occurred shall not begin before the 1st day following an ownership change to which this paragraph applies.
"(8) The amendments made by subsections (a), (b), and (c) shall not apply to any ownership change resulting from the conversion of a Minnesota mutual savings bank holding a Federal charter dated December 31, 1985, to a stock savings bank pursuant to the rules and regulations of the Federal Home Loan Bank Board, and from the issuance of stock pursuant to that conversion to a holding company incorporated in Delaware on February 21, 1984. For purposes of determining whether any ownership change occurs with respect to the holding company or any subsidiary thereof (whether resulting from the transaction described in the preceding sentence or otherwise), any issuance of stock made by such holding company in connection with the transaction described in the preceding sentence shall not be taken into account.
"(9)
[
Effective Date of 1984 Amendment
Effective Date of 1981 Amendment
Amendment by
Effective Date of 1980 Amendment
Amendment by
Effective Date of 1976 Amendment
Effective Date of 1964 Amendment
Amendment by
Delay in Effective Date of 1976 Amendment
Clarification of Regulations Related to Limitations on Certain Built-In Losses Following an Ownership Change
"(a)
"(1) The delegation of authority to the Secretary of the Treasury under section 382(m) of the Internal Revenue Code of 1986 does not authorize the Secretary to provide exemptions or special rules that are restricted to particular industries or classes of taxpayers.
"(2) Internal Revenue Service Notice 2008–83 is inconsistent with the congressional intent in enacting such section 382(m).
"(3) The legal authority to prescribe Internal Revenue Service Notice 2008–83 is doubtful.
"(4) However, as taxpayers should generally be able to rely on guidance issued by the Secretary of the Treasury legislation is necessary to clarify the force and effect of Internal Revenue Service Notice 2008–83 and restore the proper application under the Internal Revenue Code of 1986 of the limitation on built-in losses following an ownership change of a bank.
"(b)
"(1)
"(A) shall be deemed to have the force and effect of law with respect to any ownership change (as defined in section 382(g) of the Internal Revenue Code of 1986) occurring on or before January 16, 2009, and
"(B) shall have no force or effect with respect to any ownership change after such date.
"(2)
"(A) is pursuant to a written binding contract entered into on or before such date, or
"(B) is pursuant to a written agreement entered into on or before such date and such agreement was described on or before such date in a public announcement or in a filing with the Securities and Exchange Commission required by reason of such ownership change."