Page:United States Statutes at Large Volume 102 Part 4.djvu/426

 102 STAT. 3396

PUBLIC LAW 100-647—NOV. 10, 1988 (3)(A) Section 382(h)(l)(C) of the 1986 Code is amended to read as follows: "(C) SPECIAL RULES FOR CERTAIN SECTION 338 GAINS.—If an

election under section 338 is made in connection with an ownership change and the net unrealized built-in gain is zero by reason of paragraph (3)(B), then, with respect to such change, the section 382 limitation for the post-change year in which gain is recognized by reason of such election ' shall be increased by the lesser of— "(i) the recognized built-in gains by reason of such election, or "(ii) the net unrealized built-in gain (determined without regard to paragraph (3)(B))." (B) Paragraph (5) of section 382(h) of the 1986 Code is amended by striking out "recognized built-in gains and losses" and inserting in lieu thereof recognized built-in gains to the extent such gains increased the section 382 limitation for the year (or recognized built-in losses to the extent such losses are treated as pre-change losses)". (4) Section 382(i)(3) of the 1986 Code is amended— (A) by inserting "the earlier o f before "the 1st day", and (B) by inserting "or the taxable year in which the transaction being tested occurs" after "1st post-change year". (5)(A) Section 382(k)(l) of the 1986 Code is amended by inserting "or having a net operating loss for the taxable year in which the ownership change occurs after "carryover". (B) Section 382(k)(2) of the 1986 Code is amended to read as follows: "(2) OLD LOSS CORPORATION.—The term 'old loss corporation' means any corporation— "(A) with respect to which there is an ownership change, and "(B) which (before the ownership change) was a loss corporation." (6) Section 382(1)(3)(A) of the 1986 Code is amended by striking out "and" at the end of clause (iii), and by striking out clause (iv) and inserting in lieu thereof the following new clauses: "(iv) except to the extent provided in regulations, an option to acquire stock shall be treated as exercised if such exercise results in an ownership change, and "(v) in attributing stock from an entity under paragraph (2) of section 318(a), there shall not be taken into account— "(I) in the case of attribution from a corporation, stock which is not treated as stock for purposes of this section, or "(II) in the case of attribution from another entity, an interest in such entity similar to stock described in subclause (I)." (7) Clause (ii) of section 382(1)(5)(A) of the 1986 Code is amended by striking out "immediately after such ownership change" and inserting in lieu thereof "after such ownership change and as a result of being shareholders or creditors immediately before such change". (8) Section 382(1)(5)(F) of the 1986 Code is amended— (A) by inserting " '1504(a)(2)(B)' for '1504(a)(2)' and" after "substituting" in clause (i)(D, and

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