Reg. § 1.382-5 Section 382 limitation.
(a) Scope Following an ownership change, the section limitation for any post-change year is an amount equal to the value of the loss corporation multiplied by the long-term tax-exempt rate that applies with respect to the ownership change, and adjusted as required by section and the regulations thereunder. See, for example, section (relating to the carryforward of unused section limitation), section (relating to the section limitation for the post-change year that includes the change date), section (relating to short taxable years), and section (relating to recognized built-in gains and section gains).
(b) Computation of value [Reserved]
(c) Short taxable year The section limitation for any post-change year that is less than 365 days is the amount that bears the same ratio to the section limitation determined under section as the number of days in the post-change year bears to 365. The section limitation, as so determined, is adjusted as required by section and the regulations thereunder. This does not apply to a 52-53 week taxable year that is less than 365 days unless a return is required under section (relating to short periods) for such year.
(d) Successive ownership changes and absorption of a section 382 limitation
(1) In general If a loss corporation has two (or more) ownership changes, any losses or section disallowed business interest carryforwards ((within the meaning of ) attributable to the period preceding the earlier ownership change are treated as pre-change losses with respect to both ownership changes. Thus, the later ownership change may result in a lesser (but never in a greater) section limitation with respect to such pre-change losses. In any case, the amount of taxable income for any post-change year that can be offset by pre-change losses may not exceed the section limitation for such ownership change, reduced by the amount of taxable income offset by pre-change losses subject to any earlier ownership change(s).
(2) Recognized built-in gains and losses [Reserved]
(3) Effective date This applies to taxable years of a loss corporation beginning on or after January 1, 1997.
(e) Controlled groups See for rules for determining the value of a loss corporation that is a member of a controlled group.
(f) Effective date Except as otherwise provided, this section applies to a loss corporation that has an ownership change to which section , as amended by the Tax Reform Act of 1986, applies. of this section applies with respect to an ownership change occurring on or after November 13, 2020. For loss corporations that have undergone an ownership change before or after November 13, 2020, see as contained in 26 CFR part 1, revised April 1, 2019. However, taxpayers and their related parties, within the meaning of sections and , may choose to apply the rules of this section to testing dates occurring during a taxable year beginning after December 31, 2017, so long as the taxpayers and their related parties consistently apply the rules of this section, the section regulations (as defined in ), , , , , , and , and, if applicable, , , , , , , , , , , , , , , through (to the extent they effectuate the rules of , , , and ), and 1.1504-4, to that taxable year.
[T.D. 8679, 61 FR 33316, June 27, 1996, as amended by T.D. 8825, 64 FR 36178, July 2, 1999; T.D. 9905, 85 FR 56835, Sept. 14, 2020]