90 STAT. 1604
e PUBLIC LAW 94-455—OCT. 4, 1976 applied by treating the shareholders of the loss corporation as owning (immediately after the reorganization) such undistributed stock in proportion to the fair market value of the stock which such shareholders own in the loss corporation. "(5)
26 USC 368.
CERTAIN STOCK-FOR-STOCK REORGANIZATIONS.—In the case
of a reorganization described in section 368(a)(1)(B) in which the acnuired corporation is a loss corporation— "(A)
STOCK W H I C H IS E X C H A N G E D. — Paragraph s (1)(B)
and (2) shall be applied by reference to the ownership of stock of the loss corporation ( r a the r than the acquiring corporation) immediately after the reorganization. Shareholders of the loss corporation who exchange stock of the loss corporation shall be treated as owning (immediately after the reorganization) a percentage of the total fair market value of the participating stock and of all the stock of the loss corporation acquired in the exchange by the acquiring corporation which is equal to the percentage of the total fair market value of the participating stock and of all the stock, respectively, of the acquiring corporation owned (immediately after the reorganization) by such shareholders. ,
" (B) STOCK W H I C H IS NOT EXCHANGED.—Stock of the loss
corporation owned by shareholders immediately before the reorganization which was not exchanged in the reorganization shall be taken into account in applying paragraph (1) (B). For purposes of the preceding sentence, the acquiring corporation (or a corporation controlled by the acquiring corporation) shall not be treated as a shareholder of the loss corporation with respect to stock of the loss corporation acquired in a transaction described in paragraph (1), or in subsection (a)(1)(C) (unless excepted by subsection (a) (5)), during the 36-month period ending on the date of the exchange.
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" (C) TRIANGULAR EXCHANGES.—For purposes of a p p l y i n g
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the rules in this paragraph, if the shareholders of the loss corporation receive stock of a corporation controlling the acquiring corporation, such shareholders shall be treated as owning a percentage of the participating stock and of all the stock of the acquiring corporation owned by the controlling corporation equal to the percentage of the total fair market value of the participating stock and of all the stock, respectively, which such shareholders own of the controlling corporation immediately after the reorganization. " (6) EXCEPTIONS.—The limitations in this subsection shall not apply— " (A) if the same persons own substantially all the stock of the acquiring corporation and of the other corporation in substantially the same proportions; or " (B) to a net operating loss carryover from a taxable year if the acquiring or acquired corporation owned at least 40 percent of the total fair market value of the participating stock and of all the stock of the loss corporation at all times during the last half of such taxable year. For purposes of subparagraph (A), if the acquiring o r acquired corporation is controlled by another corporation, the shareholders of the controlling corporation shall be considered as also owning the stock owned by the controlling corporation in that proportion which the total fair market value of the stock which
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