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taxpayer's business may constitute the necessary change in a
trade or business. S. Rept. 1622, 83d Cong., 2d Sess. 285
(1954); sec. 1.382(a)-1(h)(7), Income Tax Regs.
The test under section 382(a) is an objective one with
specific factors to be considered along with any other relevant
item in determining whether a corporation has continued to carry
on a trade or business substantially the same as that conducted
before a change of ownership. Section 1.382(a)-1(h)(5), Income
Tax Regs., provides as follows:
(5) In determining whether a corporation has not
continued to carry on a trade or business substantially
the same as that conducted before any increase in the
ownership of its stock, all the facts and circumstances
of the particular case shall be taken into account.
Among the relevant factors to be taken into account are
changes in the corporation's employees, plant,
equipment, product, location, customers, and other
items which are significant in determining whether
there is, or is not, a continuity of the same business
enterprise. These factors shall be evaluated in the
light of the general objective of section 382(a) to
disallow net operating loss carryovers where there is a
purchase of the stock of a corporation and its loss
carryovers are used to offset gains of a business
unrelated to that which produced the losses. However,
the prohibited utilization of net operating loss
carryovers to offset gains of a business unrelated to
that which produced the losses is not dependent upon
considerations of purpose, motive, or intent, but
rather is established by the objective facts of the
particular case. The principles set forth in this
subparagraph shall be applied in accordance with the
rules set forth in the following subparagraphs of this
paragraph.
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