100 STAT. 2256
PUBLIC LAW 99-514—OCT. 22, 1986
4:>, the stock of such corporation (including any stock described in section 1504(a)(4)) immediately before the ownership change.
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"(2) SPECIAL RULE I N THE CASE O F REDEMPTION.—If a r e d e m p -
-M tion occurs in connection with a n ownership change, the value under paragraph (1) shall be determined after taking such redemption into account. "(f) L O N G - T E R M T A X - E X E M P T R A T E. — For purposes of t h i s section—
"(1) IN GENERAL.—The long-term tax-exempt r a t e shall be the highest of the adjusted Federal long-term r a t e s in effect for any month in the 3-calendar-month period ending w i t h the calendar month in which the change date occurs. "(2) A D J U S T E D FEDERAL LONG-TERM RATE.—For purposes of
paragraph (1), the term 'adjusted Federal long-term r a t e ' means the Federal long-term r a t e determined under section 1274(d), except that— "(A) paragraph s (2) and (3) thereof shall not apply, and "(B) such r a t e shall be properly adjusted for differences between r a t e s on long-term tax a b l e and tax-exempt obligations. "(g) O W N E R S H I P C H A N G E. — For purposes of t h i s section—
"(1) IN GENERAL.—There is a n ownership change if, immems diately after any owner shift involving a 5-percent shareholder or any equity s t r u c t u r e shift— ^ "(A) the percentage of the stock of the new loss corporation owned by 1 or more 5-percent shareholders has increased by more than 50 percentage points, over v!j> t "(B) the lowest percentage of stock of the old loss corporation (or any predecessor corporation) owned by such shareholders a t any t i m e during the testing period. "(2) O W N E R SHIFT INVOLVING 5-PERCENT SHAREHOLDER.—There
is a n owner shift involving a 5-percent shareholder if— -71 "(A) the r e is any change in the respective ownership of stock of a corporation, and
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"(B) such change affects the percentage of stock of such corporation owned by any person who is a 5-percent shareholder before or after such change. "(3) EQUITY STRUCTURE SHIFT D E F I N E D. —
"(A) IN GENERAL.—The term 'equity s t r u c t u r e shift' ':o;-".-^ means any reorganization (within the m e a n i n g of section 368). Such term shall not include— —^ "(i) any reorganization described in subparagraph (D) or (G) of section 368(a)(1) unless the requirements of section 354(b)(1) a r e met, and "(ii) any reorganization described in subparagraph
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(F) of section 368(a)(1). "(B) TAXABLE REORGANIZATION-TYPE TRANSACTIONS, ETC.—
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To the extent provided in regulations, the term 'equity s t r u c t u r e shift' includes taxable reorganization-type transactions, public offerings, and similar transactions. "(4) SPECIAL RULES FOR APPLICATION OF SUBSECTION.— "(A) T R E A T M ENT OF LESS THAN 5-PERCENT SHAREHOLD-
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ERS.—Except a s provided in subparagraph s (B)(i) and (C), in determining w h e the r a n ownership change has occurred, n3f>?;ri all stock owned by shareholders of a corporation w h o a r e not 5-percent shareholders of such corporation shall be >'rij « t r e a t e d a s stock owned by 1 5-percent shareholder of such to BLUP^ corporation.
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