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attribution rules of section 382(l)(3)(A)) of the loss
corporation. Inasmuch as an individual shareholder’s family
consists solely of his spouse, children, grandchildren, and
parents for these purposes, sibling shareholders are not
aggregated under section 382(l)(3)(A)(i) if none of their parents
and grandparents is a shareholder of the loss corporation.23
Since Kenneth and Charles were not children or grandchildren of
an individual shareholder of petitioner at any relevant time,
they are not aggregated for purposes of applying section 382 to
the facts of this case. It follows that Charles’s purchase of
shares from Kenneth in 1998 resulted in an ownership change with
respect to petitioner as contemplated in section 382(g).
23 We recognize that our interpretation of the statute
suggests a distinction between siblings who are the children or
grandchildren of a shareholder and those who are not, a
distinction that is arguably just as arbitrary as the
distinctions resulting from respondent’s interpretation of the
statute. See supra part III.D.2.b. That problem would not arise
if the tiebreaker rule of sec. 1.382-2T(h)(6)(iv), Temporary
Income Tax Regs., supra at 29686, were inapplicable in any
instance in which such application would have the effect of
exempting a transaction (such as a sale between siblings) that
otherwise would have increased the percentage ownership of the
purchaser’s family unit. Cf. sec. 1.382-4(d)(6)(i), Income Tax
Regs. (rules treating an option as exercised do not apply if a
principal purpose of the option is to avoid an ownership change
by having it treated as exercised); T.D. 9063, 2003-2 C.B. 510,
511 (discussing the need for additional regulations dealing with
changes in family composition in the context of sec. 382).
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