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report to “grandparents” in the context of section
382(l)(3)(A)(i). Staff of Joint Comm. on Taxation, General
Explanation of the Tax Reform Act of 1986 at 311 (J. Comm. Print
1987).
As is the case with the conference committee’s excision of
the family status provision of the House bill, see supra part
III.E.2.d., the substitution of “grandparents” for
“grandchildren” in the 1986 conference report makes perfect sense
if the family aggregation rule applies solely from the
perspective of individuals who are shareholders of the loss
corporation. Section 318(a)(1) (to which section 382(l)(3)(A)(i)
refers) is phrased in terms of the family members (spouse,
children, grandchildren, and parents) from whom shares are
attributed. The converse of that rule is that shares owned by an
individual are attributed to that individual’s spouse, parents,
grandparents, and children. The substitution of “grandparents”
for “grandchildren” in the 1986 conference report (reiterated in
the 1986 Blue Book) therefore suggests that Congress intended
individuals to be aggregated with the same family members to whom
their shares would otherwise be attributed under section
318(a)(1), which in turn suggests that Congress intended the
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