90 STAT. 1600
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26 USC 303.
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PUBLIC LAW 94-455—OCT. 4, 1976
i " ( i v) a contribution to the capital of such corporation, " (v) a decrease in the amount of such stock outstanding or in the amount of stock outstanding of another corporation owning stock in such corporation (except a decrease resulting from a redemption to pay death taxes to which section 303 applies), " ( v i) a liquidation of the interest of a part n e r in a partnership owning stock in such corporation, or " ( v i i) any combination of the transactions described in clauses (i) through ( v i), then the net operating loss carryover, if any, from such taxable year and the net operating loss carryovers, if any, from prior taxable years to such taxable year and subsequent taxable years of such corporation shall be reduced by the percentage determined under paragraph (2), "(2)
REDUCTION OF NET OPERATING LOSS CARRYOVER.—The reduc-
tion applicable under paragraph (1) shall be the sum of the percentages determined by multiplying— " (A) by three and one-half the increase in percentage points (including fractions thereof) in excess of 60 and up to and including 80, and " (B) by one and one-half the increase in percentage points (including fractions thereof) in excess of 80. The reduction under this paragraph shall be determined by reference to the increase in percentage points of the total fair market value of the participating stock or of all the stock, whichever increase is greater. "(3)
MINIMUM OWNERSHIP RULE. — Notwithstanding the
pro-
visions of paragraph (1), a net operating loss carryover from a taxable year shall not be reduced under this subsection if, at all times during the last half of such taxable year, any of the persons described in paragraph (4)(B) (determined on the last day of the taxable year referred to in paragraph (1)(A)) owned at least 40 percent of the total fair market value of the participating stock and of all the stock of the corporation. For purposes of the preceding sentence, persons owning stock of a corporation on the last day of its first taxable year shall be considered to have owned such stock at all times during the last half of such first taxable year. " (4) OPERATING RULES.—For purposes of this subsection— "(A)
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OF PURCHASE.—The
term 'purchase'
means an acquisition of stock the basis of which is determined by reference to its cost to the holder thereof. "(B)
I
DEFINITION
DESCRIPTION OF PERSON OR PERSONS.—The person or
persons referred to in paragraph (1)(B) shall be the 15 persons (or such lesser number as there are persons owning the stock on the last day of the taxable year) who own the greatest percentage of the total fair m a r k e t value of all the stock on the last day of that year, except that if any other person owns the same percentage of such stock at such time as is owned by one of the 15 persons, that other person shall also be included. If any of the persons are so related that the stock owned by one is attributed to the other under the rules specified in subparagraph (C), such persons shall be considered as only one person solely for the purpose of selecting the 15 persons (more or less) who own the greatest percentage of the total fair market value of all the stock.
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