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"(C)
PUBLIC LAW 94-455—OCT. 4, 1976 CONSTRUCTIVE OWNERSHIP.—Section 318 ( r e l a t i n g to
90 STAT. 1601 26 USC 318.
constructive ownership of stock) shall apply in determining the ownership of stock, except that section 3 1 8 (a)(2)(C) and 3 1 8 (a)(3)(C) shall be applied without regard to the 50 percent limitation contained therein. " (D) SHORT TAXABLE TEARS.—If one of the taxable years of
the corporation referred to in paragraph (1)(B) is a short taxable year, then such paragraph and paragraph (6) shall be applied by substituting 'first, second, or t h i r d ' for 'first or second' each time such phrase occurs. " (5) EXCEPTIONS.—This subsection shall not apply to a purchase or other acquisition of stock (or of an interest in a partnership or trust owning stock in the corporation) — " (A) from a person whose ownership of stock would be attributed to the holder by application of paragraph (4)(C) to the extent that such stock would be so attributed; " (B) if (and to the extent) the basis thereof is determined under section 1014 or 1023 (relating to property acquired Post, p. 1872. from a decedent), or section 1015(a) or (b) (relating to property acquired by gift or transfers in t r u s t); " (C) by a security holder or creditor in exchange for the relinquishment or extinguishment in whole or part of a claim against the corporation, unless the claim was acquired for the purpose of acquiring such stock; " (D) by one or more persons who were full-time employees of the corporation at all times during the period of 36 months ending on the last day of the taxable year of the corporation (or at all times during the period of the corporation's existence, if s h o r t e r); , " (E) by a trust described in section 401(a) which is exempt from tax under section 501(a) and which benefits exclusively the employees (or their beneficiaries) of the corporation, including a member of a controlled group of corporations (within the meaning of section 1563(a) determined without regard to section 1563(a)(4) and (e)(3)(C)) which includes such corporation; " (F) by an employee stock ownership plan meeting the requirements of section 301(d) of the T a x Reduction Act of 1975; or 26 USC 46 nole. " (G) i n a recapitalization described in section 368(a)(1) (E). "(6)
SUCCESSIVE APPLICATIONS o r SUBSECTION.—If—
" (A) a net operating loss carryover is reduced under this subsection at the end of a taxable year of a corporation, and " (B) any person described in paragraph (4)(B) who owns stock of the corporation on the last day of such taxable year does not own, on the last day of the first or second succeeding taxable year of the corporation, u greater percentage of the total fair market value of the participating stock or of all the stock of the corporation than such person owned on the last day of such taxable year, then, for purposes of applying this subsection as of the end of the first or second succeeding taxable year (as the case may be), stock owned by such person at the end of such succeeding taxable year shall be considered owned by such person a t the beginning of the first o r second preceding taxable year. Other rules relating Regulations.
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