PUBLIC LAW 100-647—NOV. 10, 1988
102 STAT. 3607
"(A) in any case described in subsection (a)(l)(A), the date on which the acquisition of control occurs, or "(B) in any case described in subsection (a)(l)(B), the date of the transfer in the reorganization." (D) Paragraph (1) of section 384(c) of the 1986 Code is amended by striking out "subsection (a)(2)" and inserting in lieu thereof "subsection (a)(l)(B)". (2) Paragraph (2) of section 384(e) of the 1986 Code is amended by striking out "the gain corporation" and inserting in lieu thereof "a corporation'. (3) Subsection (b) of section 384 of the 1986 Code is amended to read as follows: "(b) EXCEPTION WHERE CORPORATIONS UNDER COMMON CONTROL.—
"(1) IN GENERAL.—Subsection (a) shall not apply to the preacquisition loss of any corporation if such corporation and the gain corporation were members of the same controlled group at all times during the 5-year period ending on the acquisition date. "(2) CONTROLLED GROUP.—For purposes of this subsection, the term 'controlled group' means a controlled group of corporations (as defined in section 1563(a)); except that— "(A) 'more than 50 percent' shall be substituted for 'at least 80 percent' each place it appears, "(B) the ownership requirements of section 1563(a) must be met both with respect to voting power and value, and "(C) the determination shall be made without regard to subsection (a)(4) of section 1563. "(3) SHORTER PERIOD WHERE CORPORATIONS NOT IN EXISTENCE
FOR 5 YEARS.—If either of the corporations referred to in paragraph (1) was not in existence throughout the 5-year period referred to in paragraph (1), the period during which such corporation WEIS in existence (or if both, the shorter of such periods) shall be substituted for such 5-year period." (4) Section 384 of the 1986 Code is amended by redesignating subsection (e) as subsection (f) and by inserting after subsection (d) the following new subsection: "(e) ORDERING RULES FOR N E T OPERATING LOSSES, ETC.— "(1) CARRYOVER RULES.—If any preacquisition loss may not
offset a recognized build-in gain by reason of this section, such gain shall not be taken into account in determining under section 172(b)(2) the amount of such loss which may be carried to other taxable years. A similar rule shall apply in the case of any excess credit or net capital loss limited by reason of subsection (d). "(2) ORDERING RULE FOR LOSSES CARRIED FROM SAME TAXABLE
YEAR.—In any case in which ^ "(A) a preacquisition loss for any taxable year is subject to limitation under subsection (a), and "(B) a net operating loss from such taxable year is not subject to such limitation, taxable income shall be treated as having been offset 1st by the loss subject to such limitation." (5) In any case where the acquisition date (as defined in section 384(c)(2) of the 1986 Code as amended by this subsection) is before March 31, 1988, the acquiring corporation may elect to have the amendments made by this subsection not apply. Such an election shall be made in such manner as the Secretary of
26 USC 384 note.
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