Garber Industries Holding Co., Inc. - Page 16

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          the aggregation rule of section 382(l)(3)(A)(i) to apply solely             
          from the perspective of individuals who are shareholders (as                
          determined under the attribution rules of section 382(l)(3)(A))             
          of the loss corporation.14  In practical terms, our conclusion              
          dictates that we sustain respondent’s determination in this case,           
          even though we disagree with his interpretation of the statute.             
                    2.  1986 Act Revisions to Section 382                             
                    a.  Relevant Fundamental Changes to the Statute                   
               Among other things, section 621(a) of the 1986 Act replaced            
          the “purchase” rules of former section 382(a) with the concept of           
          the “owner shift”, defined broadly to include any change in the             
          respective ownership of the stock of a corporation.  Sec.                   
          382(g)(2)(A).  The occurrence of an owner shift involving a 5-              
          percent shareholder, see sec. 382(g)(2)(B), (k)(7), is one of two           
          occasions for opening the corporation’s stock transfer books to             
          determine whether the aggregate percentage ownership interest of            
          one or more such shareholders has increased by more than 50                 
          percentage points within the relevant “lookback” (testing)                  
          period.15  See sec. 382(g)(1), (i).  While the owner shift                  


               14  In other words, composite shareholders are to be                   
          constructed only around individuals who directly or indirectly              
          (through an entity or by means of an option) own shares of the              
          loss corporation.                                                           
               15  The other such occasion is the occurrence of an equity             
          structure shift (in general, most corporate reorganizations).               
          See sec. 382(g)(1), (3).                                                    





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