PUBLIC LAW 99-514—OCT. 22, 1986
100 STAT. 2261
"(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, and "(iv) except to the extent provided in regulations, paragraph (4) of section 318(a) shall apply to an option if such application results in an ownership change. 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,
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