Final Regulations Under Section 382 of the Internal Revenue Code of 1986; Limitations on Corporate Net Operating Loss Carryforwards

DEPARTMENT OF THE TREASURY

26 CFR Part 1 and Part 602

[TD 8531]

RIN 1545-A054

Final Regulations Under Section 382 of the Internal Revenue Code

of 1986; Limitations on Corporate Net Operating Loss Carryforwards

AGENCY: Internal Revenue Service (IRS), Treasury.

ACTION: Final regulations.

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SUMMARY: This document contains final regulations under section 382 of

the Internal Revenue Code of 1986. The final regulations provide rules

regarding the treatment of options in determining whether a loss

corporation has an ownership change, within the meaning of section 382.

These rules are necessary to enable a loss corporation to determine

whether it is subject to the annual limitation provided in section 382

on the use of certain losses.

DATES: These regulations are effective November 5, 1992. For dates of

applicability of these regulations, see ``Effective date'' paragraph in

the SUPPLEMENTARY INFORMATION portion of the preamble.

FOR FURTHER INFORMATION CONTACT: Annette M. Ahlers of the Office of

Assistant Chief Counsel (Corporate), Internal Revenue Service, 1111

Constitution Avenue NW., Washington, DC 20224 (Attention:

CC:DOM:CORP:1), or telephone (202) 622-7750 (not a toll-free number).

SUPPLEMENTARY INFORMATION:

Paperwork Reduction Act

The collections of information contained in these final regulations

have been reviewed and approved by the Office of Management and Budget

in accordance with the Paperwork Reduction Act of 1980 (44 U.S.C.

3504(h)) under control number 1545-1120. The estimated annual burden

per respondent varies from .1 hour to .5 hour, depending on individual

circumstances, with an estimated average of .3 hour.

Comments concerning the accuracy of this burden estimate and

suggestions for reducing the burden should be sent to the Internal

Revenue Service, Attention: IRS Reports Clearance Officer, PC:FP,

Washington, DC 20224, and to the Office of Management and Budget,

Attention: Desk Officer for the Department of the Treasury, Office of

Information and Regulatory Affairs, Washington, DC 20503.

Background

This document contains final regulations to be added to the Income

Tax Regulations (26 CFR part 1) under section 382 of the Internal

Revenue Code (Code). The final regulations provide rules regarding the

treatment of options in determining whether a loss corporation has an

ownership change within the meaning of that section.

Proposed regulations on this subject were set forth in a notice of

proposed rulemaking published in the Federal Register on November 5,

1992. See 57 FR 52743. The Internal Revenue Service (IRS) received

comments on the proposed regulations and held a public hearing on

February 2, 1993. Having considered the comments and the statements

made at the hearing, the IRS and the Treasury Department adopt the

proposed regulations as revised by this Treasury decision.

Explanation of Provisions

Section 382 of the Code limits the amount of income earned by a

corporation after an ownership change that can be offset by losses

incurred prior to the ownership change. In general, an ownership change

is an increase of more than 50 percentage points in stock ownership by

5-percent shareholders over a three-year period.

Section 382(l)(3)(A) states that, except as provided in

regulations, an option to acquire stock is treated as exercised if the

deemed exercise would result in an ownership change. That section also

provides that a similar rule applies in the case of certain interests

that are similar to options. These rules are implemented by Sec. 1.382-

2T(h)(4) of the temporary regulations.

The IRS issued the proposed regulations in response to numerous

comments regarding the practical difficulties of applying the option

rules in the temporary regulations. The proposed regulations were

intended to reduce these practical difficulties by narrowing the scope

of the option rules and simplifying their application.

The proposed regulations treat an option as exercised only if it is

issued or transferred for an abusive principal purpose. The proposed

regulations define an abusive principal purpose as a principal purpose

of manipulating the timing of an owner shift to avoid, or ameliorate

the impact of, an ownership change by one of two means. These two means

are (1) providing the holder of the option, prior to its exercise, with

a substantial portion of the attributes of ownership of the underlying

stock, and (2) facilitating the creation of income to absorb the loss

corporation's losses prior to the exercise of the option.

The determination of whether an option is issued or transferred for

an abusive principal purpose is based on all relevant facts and

circumstances. The proposed regulations include a nonexclusive list of

factors that evidence an abusive principal purpose. One factor, for

example, is the receipt by the loss corporation of a capital

contribution (in exchange for stock or otherwise) in connection with

the issuance or transfer of an option.

This Treasury Decision adopts the proposed regulations with several

revisions. The following discussion describes the principal differences

between the proposed and final regulations.

A. The Ownership, Control, and Income Tests

The final regulations treat an option as exercised if it satisfies

either an ownership test, a control test, or an income test.

The ownership test is substantially the same as the first element

of the abusive principal purpose test of the proposed regulations. An

option satisfies the ownership test if a principal purpose of its

issuance, transfer, or structuring is to avoid or ameliorate the impact

of an ownership change by providing the holder of the option, prior to

its exercise or transfer, with a substantial portion of the attributes

of ownership of the underlying stock.

The control test applies to an option held by a major shareholder

or used in connection with a major corporate acquisition. An actual or

constructive holder of more than 50 percent of a corporation's stock

can generally exercise significant influence over the corporation prior

to the exercise of the option. The rules of the proposed regulations,

however, may not adequately take into account the relationship between

a major shareholder or option holder and the loss corporation. In

particular, the attributes of ownership element of the abusive

principal purpose test of the proposed regulations focuses only on the

attributes of ownership of the stock covered by an option. It does not

take into account an option holder's influence over a corporation as a

result of owning other stock or options. In addition, the proposed

regulations imply (and, as described below, the final regulations

explicitly state) that the ability of the holder of an option with a

fixed exercise price to share in future appreciation of the underlying

stock is not, by itself, a substantial portion of the attributes of

ownership of the stock. However, the extent to which a fixed price

option transfers an economic interest in the loss corporation to an

option holder may be of particular concern when the option is held by a

major shareholder or is used in connection with a major corporate

acquisition.

For the reasons described above, the final regulations adopt a

control test that applies to options held by major shareholders or used

in connection with major corporate acquisitions. An option satisfies

the control test if (1) a principal purpose of its issuance, transfer,

or structuring is to avoid or ameliorate the impact of an ownership

change, and (2) the holder of the option and any persons related to the

option holder have, in the aggregate, a direct and indirect ownership

interest in the loss corporation of more than 50 percent (determined as

if the increase in such persons' percentage ownership interest that

would result from the exercise of the option in question and any other

options to acquire stock held by such persons, and any other intended

increases in such persons' percentage ownership interest, actually

occurred on the date the option is issued or transferred).

The control test will subject certain options to inquiry even if it

is unlikely that the option holder (or a related person) will actually

acquire (directly or indirectly) more than 50 percent of the stock of

the loss corporation. The control test is not satisfied, however,

unless a requisite purpose is present. For example, the control test

will apply to a contingent option to acquire more than 50 percent of

the stock of a loss corporation even though the option holder has no

other relationship to the corporation. Nevertheless, in such a

situation, the option would not be treated as exercised if it were not

issued with a principal purpose to avoid or ameliorate the impact of an

ownership change.

The income test is substantially the same as the second element of

the abusive principal purpose test of the proposed regulations. An

option satisfies the income test if a principal purpose of its

issuance, transfer, or structuring is to avoid or ameliorate the impact

of an ownership change by facilitating the creation of income prior to

its exercise or transfer. The final regulations clarify that the

creation of income concept is a broad one, and refers not only to the

creation of income, but to the creation of any value (e.g., unrealized

built-in gains that would ameliorate the impact of an ownership

change), and also to the acceleration of income or the deferral of

deductions.

B. Clarification of Principal Purpose Concept

The proposed regulations treat an option as exercised if a

principal purpose of its issuance or transfer is abusive. Various forms

of this purpose standard are employed throughout the Code and

regulations. See, e.g., sections 306(b)(4) (``one of its principal

purposes''); 336(d)(2)(B) (``a principal purpose''); 453(e)(7) (``one

of its principal purposes''); 7872(c) (``1 of the principal

purposes''); 1.707-6(b) (``a principal purpose''); 1.1275-2T(g) (``a

principal purpose''); and 1.1504-4(g)(3)(iv)(B) (``a principal

purpose''). The IRS and the Treasury Department considered other

formulations of a purpose test in an effort to provide greater clarity

on the application of the test. No appropriate substitute was

identified. Accordingly, the final regulations retain the ``a principal

purpose'' standard, but clarify that the relevant inquiry under this

standard is not limited to the purposes for which an option is issued

or transferred. The inquiry also focuses on the purposes of structuring

the option, either alone or in combination with other arrangements. An

abusive purpose can be a principal purpose even when it is outweighed

by the non-tax reasons (taken together or separately) for the

occurrence or structure of a transaction.

C. Elimination of Abuse Factors and Disclosure Requirement

As noted above, the proposed regulations provide a nonexclusive

list of factors that evidence an abusive principal purpose. The

proposed regulations require a loss corporation to disclose certain

information to the IRS if it does not treat as exercised an option to

which one of the specific abuse factors applies.

The IRS and the Treasury Department have determined that the

enforcement benefits that would be achieved by the disclosure

requirement do not justify the administrative burden it would impose on

taxpayers (in addition to the general disclosure requirement of the

temporary regulations; see Sec. 1.382-2T(a)(2)(ii)). Therefore, the

final regulations do not retain the disclosure requirement of the

proposed regulations. The accuracy-related penalty of section 6662 may

apply, however, if a substantial underpayment results from a position

that lacks substantial authority that is not adequately disclosed by

the taxpayer.

Because the promulgation of specific abuse factors in the proposed

regulations related largely to the disclosure requirement, the final

regulations do not retain the specific abuse factors. The elimination

of the abuse factors also addresses commentators' concerns that these

factors could have been viewed as creating a presumption that an option

to which a factor applied was issued or transferred for an abusive

principal purpose.

Instead of providing specific abuse factors that are evidence of an

abusive principal purpose, the final regulations merely identify a

series of factors that exemplify circumstances that may be probative

under the ownership, control, and income tests. The weight given to

these factors depends on the facts and circumstances. The presence or

absence of any of these factors does not create a presumption.

Among the factors that are relevant in applying all three tests are

any business purposes for the issuance, transfer, or structure of an

option, the likelihood of exercise of the option (taking into account,

for example, any contingencies to its exercise), transactions related

to the issuance or transfer of the option, and the consequences of

treating the option as exercised. An option is not treated as exercised

under any of the tests, however, if a principal purpose of its

issuance, transfer, or structuring is to avoid an ownership change by

having it treated as exercised.

The final regulations also provide examples of additional factors

that are taken into account in applying each of the separate tests.

Among the additional factors that are taken into account in applying

the ownership test are the relationship between the exercise price of

the option and the value of the underlying stock at the time of the

issuance or transfer of the option, whether the option provides its

holder with the right to participate in the management of the loss

corporation or with other rights that ordinarily would be afforded to

owners of the underlying stock, and the existence of reciprocal put and

call options. The ability of the holder of an option with a fixed

exercise price to share in future appreciation of the underlying stock

is also a relevant factor, but is not sufficient, by itself, for the

option to be treated as exercised. Conversely, the fact that the holder

of such an option does not bear the risk of loss due to declines in

value of the underlying stock does not preclude the option from

satisfying the ownership test.

Among the additional factors that are taken into account in

applying the control test are the economic interests in the loss

corporation of the option holder or related persons and the influence

of those persons over the management of the loss corporation.

Among the additional factors that are taken into account in

applying the income test are whether, in connection with the issuance

or transfer of the option, the loss corporation engages in income

acceleration transactions or the holder of the option or a related

person purchases stock from, or makes a capital contribution or loan

to, the loss corporation that can reasonably be expected to avoid or

ameliorate the impact of an ownership change. Examples of income

acceleration transactions are those outside the ordinary course of the

loss corporation's business that accelerate income or gain into the

period prior to the exercise of the option or defer deductions to the

period after the exercise of the option.

Commentators on the proposed regulations asked for clarification of

the definition of ``capital contribution'' and guidance on the

relevance of capital contributions in determining whether an option is

treated as exercised. The final regulations address these comments in

two respects. First, as noted above, the final regulations eliminate

the abuse factors of the proposed regulations, including the factor

related to capital contributions. Therefore, although a capital

contribution or similar transaction made in connection with the

issuance or transfer of an option is relevant in applying the income

test, it cannot be viewed as giving rise to a presumption that the

option satisfies the test. In addition, the final regulations provide

further guidance regarding the relevance of a capital contribution or

similar transaction. The final regulations provide that a capital

contribution or similar transaction is more probative toward an option

satisfying the income test the larger the amount received by the loss

corporation in the transaction or related transactions. Further, such a

transaction is generally not taken into account in applying the income

test if it is made to enable the loss corporation to continue the basic

operations of its business for such purposes as meeting the monthly

payroll or funding other operating expenses.

D. Safe Harbors

In response to commentators' requests, the final regulations

provide several safe harbors. The safe harbors apply to (i) typical

contracts to acquire stock that are closed on a change date within one

year after they are entered into, (ii) options that are part of

security arrangements in typical lending transactions, (iii) certain

compensatory options, (iv) certain options exercisable only upon death,

disability, mental incompetency, or retirement, and (v) certain rights

of first refusal. In addition, the final regulations authorize the IRS

to promulgate additional safe harbors by publication in the Internal

Revenue Bulletin.

An option to which a safe harbor applies is generally not subject

to the ownership, control, or income test. A contract to acquire stock,

however, is not exempted from the income test regardless of whether it

is described in the safe harbor applicable to contracts.

E. Treatment of Options Related to Certain Bankruptcy Reorganizations

Section 382(l)(5) provides rules that apply to ownership changes

that occur while the loss corporation is under the jurisdiction of a

court in a title 11 or similar case. A loss corporation that qualifies

for these special rules can use its pre-change losses, after certain

reductions, without regard to the annual limitation provided in section

382.

Section 1.382-9(o) of the regulations provides that the option

attribution rules of the temporary regulations do not apply to certain

options that arise as part of a plan of reorganization in a title 11 or

similar case until the time that the plan becomes effective. This rule

clarifies the timing of any ownership change that results from the

plan. This Treasury decision amends Sec. 1.382-9(o) to provide that

neither the option attribution rules of the temporary regulations nor

the new rules of the final regulations apply prior to the time the plan

becomes effective.

In general, the new option rules of the final regulations apply to

determine whether an ownership change occurs at the time the plan

becomes effective. As explained in Part F, below, however, a loss

corporation that is subject to a title 11 or similar case filed on or

before May 17, 1994 may elect to apply the option attribution rules of

the temporary regulations up to the time that the plan of

reorganization becomes effective.

Section 1.382-9(e) of the regulations provides rules regarding the

treatment of options for purposes of determining eligibility for the

special rules of section 382(l)(5). The preamble of the proposed

regulations requested comments on the desirability of changes to the

rules of Sec. 1.382-9(e) in light of the option rules of the proposed

regulations. The IRS and the Treasury Department are considering the

comments received in response to this request.

F. Effective Date

The option rules of the proposed regulations were proposed to apply

on any testing date on or after November 5, 1992. Many commentators

asked that taxpayers be allowed to apply the new option rules

retroactively. These commentators observed that many of the options

that were treated as exercised under the temporary regulations (and

thus resulted in ownership changes) would not be treated as exercised

under the rules of the proposed regulations. Thus, if the same options

had been issued after the effective date of the proposed regulations,

they would not necessarily have caused an ownership change. The

commentators argued that the application of the section 382 limitation

should not depend on the timing of the issuance of certain options.

The IRS and the Treasury Department have declined to allow

taxpayers to apply the new option rules retroactively because the

results of retroactive application of these rules would be

inappropriate. The results would be largely the same as if no option

attribution rules had been in effect prior to November 5, 1992, except

cases in which attribution favored the taxpayer. A taxpayer could argue

that the options in question could not have had an abusive principal

purpose because the temporary regulations treated an option as

exercised whenever an ownership change would result. Accordingly, a

taxpayer who had an ownership change under the prior rules could

reverse the ownership change by electing to apply the new rules

retroactively--an election the taxpayer would presumably make unless,

in retrospect, the application of the temporary regulations had proved

to be favorable.

In light of the foregoing, the final regulations retain the general

effective date of the proposed regulations; the option rules of the

final regulations generally apply on testing dates on or after November

5, 1992.

Although the option rules of the final regulations, and not those

of the temporary regulations, generally apply on testing dates on or

after November 5, 1992, the final regulations allow a loss corporation

to elect to apply the option rules of the temporary regulations for an

extended period. For most loss corporations, the election applies to

all testing dates that occur before May 17, 1994. If, however, the loss

corporation is subject to a title 11 or similar case filed on or before

May 17, 1994, the election applies to all testing dates on or before

the time the plan of reorganization becomes effective.

The final regulations provide an exception to the general effective

date for the control test. The test generally does not apply to an

option issued on or before March 17, 1994, or issued within 60 days

after that date pursuant to a plan existing before that date. The

control test will apply to such an option, however, on testing dates on

or after the date of a transfer of the option that would itself cause

the option to satisfy the control test.

Special Analyses

It has been determined that this Treasury Decision is not a

significant regulatory action, as defined in Executive Order 12866.

Therefore, a regulatory assessment is not required. It has also been

determined that section 553(b) of the Administrative Procedure Act (5

U.S.C. chapter 5) and the Regulatory Flexibility Act (5 U.S.C. chapter

6) do not apply to these regulations, and, therefore, a Regulatory

Flexibility Analysis is not required. Pursuant to section 7805(f) of

the Code, the notice of proposed rulemaking preceding these regulations

was submitted to the Small Business Administration for comment on its

impact on small business.

Drafting Information

The principal author of these regulations is Annette M. Ahlers,

Office of Assistant Chief Counsel (Corporate). However, other personnel

from the IRS and Treasury Department participated in their development.

List of Subjects

26 CFR Part 1

Income taxes, Reporting and recordkeeping requirements.

26 CFR Part 602

Reporting and recordkeeping requirements.

Amendments to the Regulations

PART 1--INCOME TAXES

Accordingly, 26 CFR parts 1 and 602 are amended as follows:

Paragraph 1. The authority citation for part 1 is amended by

removing the current citations for Secs. 1.382-2, 1.382-4, and 1.382-9

and by adding the following citations to read as follows:

Authority: 26 U.S.C. 7805 * * * Section 1.382-2 also issued 26

U.S.C. 382(k)(6)(B)(ii) and 26 U.S.C. 382(m). * * * Section 1.382-4

also issued under 26 U.S.C. 382(l)(3) and 382(m). * * * Section

1.382-9 also issued under 26 U.S.C. 382(l)(3) and (m). * * *

Authority: 26 U.S.C. 7805.

Par. 2. Section 1.382-1 is amended as follows:

1. Entries for Sec. 1.382-2, paragraphs (a)(3) through (b)(3) are

added.

2. Entries for Sec. 1.382-2T are amended by:

a. Revising the entry for paragraph (a)(2)(i).

b. Adding an entry for paragraph (h)(4)(xiii).

c. Removing the entry for paragraph (h)(4)(x)(Z).

d. Adding entries for paragraphs (m)(4)(vi) and (m)(4)(vii).

3. The entries for Sec. 1.382-4 are revised.

4. The additions and revisions read as follows:

Sec. 1.382-1 Table of Contents.

* * * * *

Sec. 1.382-2 General rules for ownership change.

(a) * * *

(3) Stock.

(i) In general. [Reserved]

(ii) Convertible stock.

(4) Testing date.

(i) In general.

(ii) Exceptions.

(b) Effective dates.

(1) In general. [Reserved]

(2) Rules provided in paragraph (a)(3)(ii) of this section.

(i) In general.

(ii) Certain convertible preferred stock.

(3) Rules provided in paragraph (a)(4) of this section.

Sec. 1.382-2T Definition of ownership change under section 382, as

amended by the Tax Reform Act of 1986 (temporary).

(a) * * *

(2) * * *

(i) Testing dates prior to November 5, 1992.

* * * * *

(h) * * *

(4) * * *

(xiii) Effective date.

* * * * *

(m) * * *

(4) * * *

(vi) Rules provided in paragraph (h)(4) of this section.

(vii) Rules provided in paragraph (a)(2)(i) of this section.

* * * * *

Sec. 1.382-4 Constructive ownership of stock.

(a) In general. [Reserved]

(b) Attribution from corporations, partnerships, estates and

trusts. [Reserved]

(c) Attribution to corporations, partnerships, estates and

trusts. [Reserved]

(d) Treatment of options as exercised.

(1) General rule.

(2) Options treated as exercised.

(i) Issuance or transfer.

(ii) Subsequent testing dates.

(3) The ownership test.

(4) The control test.

(i) In general.

(ii) Operating rules.

(A) Person and related persons.

(B) Indirect ownership interest.

(5) The income test.

(6) Application of the ownership, control, and income tests.

(i) In general.

(ii) Application of ownership test.

(iii) Application of control test.

(iv) Application of income test.

(7) Safe harbors.

(i) Contracts to acquire stock.

(ii) Escrow, pledge, or other security agreements.

(iii) Compensatory options.

(iv) Options exercisable only upon death, disability, mental

incompetency or retirement.

(v) Rights of first refusal.

(vi) Options designated in the Internal Revenue Bulletin.

(8) Additional rules.

(i) Contracts to acquire stock.

(ii) Indirect transfer of an option.

(iii) Options related to interests in non-corporate entities.

(iv) Puts.

(9) Definition of option.

(i) In general.

(ii) Convertible stock.

(iii) Series of options.

(iv) General principles of tax law.

(10) Subsequent treatment of options treated as exercised on a

change date.

(i) In general.

(ii) Alternative look-back rule for options exercised within 3

years after change date.

(11) Transfers not subject to deemed exercise.

(12) Certain rules regarding non-stock interests as stock.

(e) Stock transferred under certain agreements. [Reserved]

(f) Family attribution. [Reserved]

(g) Definitions.

(h) Effective date.

(1) In general. [Reserved]

(2) Option attribution rules.

(i) General rule.

(ii) Special rule for control test.

(iii) Convertible stock issued prior to July 20, 1988.

(A) In general.

(B) Exceptions.

(1) Nonvoting convertible preferred stock.

(2) Other convertible stock.

(iv) Convertible stock issued on or after July 20, 1988, and

before November 5, 1992.

(v) Certain options in existence immediately before and after an

ownership change.

(vi) Election to apply Sec. 1.382-2T(h)(4).

(A) In general.

(B) Additional consequences of election.

(C) Time and manner of making the election.

(D) Amended returns.

(3) Special rule for options subject to attribution under

Sec. 1.382-2T(h)(4).

* * * * *

Par. 3. Section 1.382-2 is amended as follows:

1. By revising paragraph (a)(1)(i)(B).

2. By adding paragraphs (a)(3), (a)(4), and (b).

3. The revision and additions read as follows.

Sec. 1.382-2 General rules for ownership change.

(a) * * *

(1) * * *

(i) * * *

(B) For the taxable year that includes a testing date, as defined

in paragraph (a)(4) of this section or Sec. 1.382-2T(a)(2)(i),

whichever is applicable (determined for purposes of this paragraph

(a)(1) without regard to whether the corporation is a loss

corporation), has a net operating loss, a net capital loss, excess

foreign taxes under section 904(c), unused general business credits

under section 38, or an unused minimum tax credit under section 53, or

* * * * *

(3) Stock--(i) In general. [Reserved]

(ii) Convertible stock. The term ``stock'' includes any convertible

stock. For rules regarding the treatment of certain convertible stock

as an option, see Sec. 1.382-4(d)(9)(ii).

(4) Testing date--(i) In general. Except as provided in paragraph

(a)(4)(ii) of this section, a loss corporation is required to determine

whether an ownership change has occurred immediately after any owner

shift, or issuance or transfer (including an issuance or transfer

described in Sec. 1.382-4(d)(8)(i) or (ii)) of an option with respect

to stock of the loss corporation that is treated as exercised under

Sec. 1.382-4(d)(2). Each date on which a loss corporation is required

to make a determination of whether an ownership change has occurred is

referred to as a testing date. All computations of increases in

percentage ownership are to be made as of the close of the testing date

and any transactions described in this paragraph (a)(4) that occur on

that date are treated as occurring simultaneously at the close of the

testing date. See Sec. 1.382-2T(e)(1) for the definition of owner

shift. The term option, as used in this paragraph (a)(4), includes

interests that are treated as options under Sec. 1.382-4(d)(9). For

rules regarding the determination of whether dates prior to November 5,

1992, are testing dates, see Sec. 1.382-2T(a)(2)(i).

(ii) Exceptions. A loss corporation is not required to determine

whether an ownership change has occurred immediately after--

(A) Any transfer of stock, or an option with respect to stock, of

the loss corporation in any of the circumstances described in section

382(l)(3)(B) (death, gift, divorce, etc.); or

(B) The transfer of an option described in Sec. 1.382-4(d)(11)(i)

or (ii) (relating to transfers between persons who are not 5-percent

shareholders or between members of certain public groups).

(b) Effective dates--(1) In general. [Reserved]

(2) Rules provided in paragraph (a)(3)(ii) of this section--(i) In

general. Except as provided in paragraph (b)(2)(ii) of this section,

the rules provided in paragraph (a)(3)(ii) of this section apply with

respect to any convertible stock.

(ii) Certain convertible preferred stock. Convertible stock that,

when issued, would be described in section 1504(a)(4) by disregarding

subparagraph (D) thereof and by ignoring the potential participation in

corporate growth that the conversion feature may offer is treated as

stock described in that section (and thus is not treated as stock for

the purpose of determining whether an ownership change occurs, but is

taken into account for the purpose of determining the value of the loss

corporation immediately before an ownership change; see sections

382(e)(1) and 382(k)(6)(A)) if--

(A) The stock was issued on or after July 20, 1988, and prior to

November 5, 1992; or

(B) The stock was issued prior to July 20, 1988, and the loss

corporation makes the election described in Notice 88-67, 1988-1 C.B.

555, (see Sec. 601.601(d)(2)(ii)(b) of this chapter for availability of

Cumulative Bulletins (C.B.)) on or before the earlier of the date

prescribed in the Notice or December 7, 1992.

(3) Rules provided in paragraph (a)(4) of this section. The rules

provided in paragraph (a)(4) of this section apply to determine whether

dates on or after November 5, 1992, are testing dates.

Par. 4. Section 1.382-2T is amended as follows:

1. The paragraph heading for paragraph (a)(2)(i) is revised.

2. A sentence is added at the end of paragraph (a)(2)(i)(B).

3. Paragraph (f)(18)(iii) is amended by adding a sentence at the

end of the concluding text.

4. Paragraph (h)(4)(x)(Z) is removed.

5. Paragraph (h)(4)(xiii) is added.

6. Paragraphs (m)(4)(vi) and (m)(4)(vii) are added.

7. The revisions and additions read as follows:

Sec. 1.382-2T Definition of ownership change under section 382, as

amended by the Tax Reform Act of 1986 (temporary).

(a) * * *

(2) * * *

(i) Testing dates prior to November 5, 1992.* * *

(B) * * * See paragraph (m)(4)(vii) of this section for special

rules regarding the effective date of the provisions of this paragraph

(a)(2)(i).

* * * * *

(f) * * *

(18) * * *

(iii) Treating interests not constituting stock as stock. * * * See

Sec. 1.382-4(d)(12) for rules that apply with respect to options and

this paragraph (f)(18)(iii).

* * * * *

(h) * * *

(4) * * *

(xiii) Effective date. See paragraph (m)(4)(vi) of this section for

special rules regarding the effective date of the provisions of this

paragraph (h)(4).

* * * * *

(m) * * *

(4) * * *

(vi) Rules provided in paragraph (h)(4) of this section. The rules

provided in paragraph (h)(4) of this section do not apply on any

testing date on or after November 5, 1992. The rule provided in

paragraph (h)(4)(viii) of this section applies to the lapse or

forfeiture of any option treated as exercised under paragraph (h)(4)(i)

of this section. If an option is treated as exercised under paragraph

(h)(4)(i) of this section, and the option is actually exercised on a

day that is within 120 days after the date on which the option is

treated as exercised, the rule provided in paragraph (h)(4)(vi)(B) of

this section applies (even if the actual exercise of the option occurs

on a date on which the rules of paragraph (h)(4) of this section would

not otherwise apply). Thus, in such a case, the loss corporation may

elect to treat paragraphs (h)(4)(i) and (vi)(A) of this section as not

applying to the option and take into account only the acquisition of

loss corporation stock resulting from the actual exercise of the

option.

(vii) Rules provided in paragraph (a)(2)(i) of this section. The

rules provided in paragraph (a)(2)(i) of this section apply to

determine whether dates prior to November 5, 1992, are testing dates.

For rules regarding the determination of whether dates on or after

November 5, 1992, are testing dates, see Sec. 1.382-2(a)(4).

* * * * *

Par. 5. Section 1.382-4 is revised to read as follows: Sec. 1.382-4

Constructive ownership of stock.

(a) In general. [Reserved]

(b) Attribution from corporations, partnerships, estates and

trusts. [Reserved]

(c) Attribution to corporations, partnerships, estates and trusts.

[Reserved]

(d) Treatment of options as exercised--(1) General rule. Except as

provided in paragraph (d)(2) of this section, an option is not treated

as exercised under section 382(l)(3)(A).

(2) Options treated as exercised--(i) Issuance or transfer. For

purposes of determining whether an ownership change occurs, an option

is treated as exercised on the date of its issuance or transfer if, on

that date, the option satisfies--

(A) The ownership test of paragraph (d)(3) of this section,

(B) The control test of paragraph (d)(4) of this section, or

(C) The income test of paragraph (d)(5) of this section.

(ii) Subsequent testing dates. Except as provided in paragraph

(d)(10) of this section, an option that is treated as exercised on the

date of its issuance or transfer is treated as exercised on any

subsequent testing date (as defined in Sec. 1.382-2(a)(4)) for purposes

of determining whether an ownership change occurs.

(3) The ownership test. An option satisfies the ownership test if a

principal purpose of the issuance, transfer, or structuring of the

option (alone or in combination with other arrangements) is to avoid or

ameliorate the impact of an ownership change of the loss corporation by

providing the holder of the option, prior to its exercise or transfer,

with a substantial portion of the attributes of ownership of the

underlying stock.

(4) The control test-- (i) In general. An option satisfies the

control test if--

(A) A principal purpose of the issuance, transfer, or structuring

of the option (alone or in combination with other arrangements) is to

avoid or ameliorate the impact of an ownership change of the loss

corporation, and

(B) The holder of the option and any persons related to the option

holder have, in the aggregate, a direct and indirect ownership interest

in the loss corporation of more than 50 percent (determined as if the

increase in such persons' percentage ownership interest that would

result from the exercise of the option in question and any other

options to acquire stock held by such persons, and any other intended

increases in such persons' percentage ownership interest, actually

occurred on the date the option is issued or transferred).

(ii) Operating rules--(A) Person and related persons. For purposes

of this paragraph (d)(4)--

(1) The term person includes an individual or entity, but not a

public group, as defined in Sec. 1.382-2T(f)(13), and

(2) Persons are related if they bear a relationship specified in

section 267(b) or 707(b) or if they have a formal or informal

understanding among themselves to make a coordinated acquisition of

stock, within the meaning of Sec. 1.382-3(a)(1)(i).

(B) Indirect ownership interest. The indirect ownership interest

that the holder of the option and any persons related to the holder

have in the loss corporation is determined by applying the constructive

ownership rules of Sec. 1.382-2T(h), other than Sec. 1.382-

2T(h)(2)(i)(A) (which treats stock attributed pursuant to section

318(a)(2) as no longer being owned by the entity from which it is

attributed) and Sec. 1.382-2T(h)(4) (which treats options as exercised

in certain circumstances). If, however, the application of such

constructive ownership rules without regard to Sec. 1.382-

2T(h)(2)(i)(A) would result in the same stock of the loss corporation

being owned by two or more such persons, appropriate adjustments must

be made so that such stock is not counted more than once in computing

the aggregate ownership interests of such persons.

(5) The income test. An option satisfies the income test if a

principal purpose of the issuance, transfer, or structuring of the

option (alone or in combination with other arrangements) is to avoid or

ameliorate the impact of an ownership change of the loss corporation by

facilitating the creation of income (including accelerating income or

deferring deductions) or value (including unrealized built-in gains)

prior to the exercise or transfer of the option.

(6) Application of the ownership, control, and income tests--(i) In

general. Whether an option satisfies the ownership, control, or income

test depends on all the relevant facts and circumstances. Among the

factors that are relevant in applying all three tests are any business

purposes for the issuance, transfer, or structure of the option, the

likelihood of exercise of the option (taking into account, for example,

any contingencies to its exercise), transactions related to the

issuance or transfer of the option, and the consequences of treating

the option as exercised.

An option is not treated as exercised under any of the three tests,

however, if a principal purpose of its issuance, transfer, or

structuring is to avoid an ownership change by having it treated as

exercised. Paragraphs (d)(6) (ii), (iii) and (iv) of this section

describe additional examples of factors that are relevant in applying

each test. The weight given to any factor depends on all the facts and

circumstances. The presence or absence of any factor described in this

paragraph (d)(6) does not create a presumption.

(ii) Application of ownership test. Among the additional factors

that are taken into account in applying the ownership test are the

relationship, at the time of issuance or transfer of the option,

between the exercise price of the option and the value of the

underlying stock, whether the option provides its holder or a related

person with the right to participate in the management of the loss

corporation or with other rights that ordinarily would be afforded to

owners of the underlying stock, and the existence of reciprocal options

(e.g., a call option held by the prospective purchaser and a

corresponding put option held by the prospective seller). The ability

of the holder of an option with a fixed exercise price to share in

future appreciation of the underlying stock is also a relevant factor,

but is not sufficient, by itself, for the option to satisfy the

ownership test. Conversely, the fact that the holder of such an option

does not bear the risk of loss due to declines in value of the

underlying stock does not preclude the option from satisfying the

ownership test.

(iii) Application of control test. Among the additional factors

that are taken into account in applying the control test are the

economic interests in the loss corporation of the option holder or

related persons and the influence of those persons over the management

of the loss corporation (in either case, through the option or a

related arrangement, or through rights in stock).

(iv) Application of income test. Among the additional factors that

are taken into account in applying the income test are whether, in

connection with the issuance or transfer of the option, the loss

corporation engages in income acceleration transactions or the holder

of the option or a related person purchases stock (including section

1504(a)(4) stock) from, or makes a capital contribution or loan to, the

loss corporation that can reasonably be expected to avoid or ameliorate

the impact of an ownership change. Examples of income acceleration

transactions are those outside the ordinary course of the loss

corporation's business that accelerate income or gain into the period

prior to the exercise of the option (or defer deductions to the period

after the exercise of the option). A stock purchase, capital

contribution, or loan is more probative toward an option satisfying the

income test the larger the amount received by the loss corporation in

the transaction or related transactions. A stock purchase, capital

contribution, or loan is generally not taken into account in applying

the income test if it is made to enable the loss corporation to

continue basic operations of its business (e.g., to meet the monthly

payroll or fund other operating expenses of the loss corporation).

(7) Safe harbors. Except as provided in paragraph (d)(7)(i) of this

section, an option described in this paragraph (d)(7) is not treated as

exercised pursuant to the ownership, control, or income test. The

failure of an option to be described in this paragraph (d)(7) does not

affect the determination of whether the option satisfies the ownership,

income, or control test. The following options are described in this

paragraph (d)(7):

(i) Contracts to acquire stock. A stock purchase agreement or a

similar arrangement, the terms of which are commercially reasonable, in

which the parties' obligations to complete the transaction are subject

only to reasonable closing conditions, and which is closed on a change

date within one year after it is entered into. An option is not exempt

from the income test of paragraph (d)(5) of this section solely by

reason of its description in this paragraph (d)(7)(i).

(ii) Escrow, pledge, or other security agreements. An option that

is part of a security arrangement in a typical lending transaction

(including a purchase money loan), if the arrangement is subject to

customary commercial conditions. For this purpose, a security

arrangement includes, for example, an agreement for holding stock in

escrow or under a pledge or other security agreement, or an option to

acquire stock contingent upon a default under a loan.

(iii) Compensatory options. An option to acquire stock in a

corporation with customary terms and conditions provided to an

employee, director, or independent contractor in connection with the

performance of services for the corporation or a related person (and

that is not excessive by reference to the services performed) and

which--

(A) Is nontransferable within the meaning of Sec. 1.83-3(d); and

(B) Does not have a readily ascertainable fair market value as

defined in Sec. 1.83-7(b) on the date the option is issued.

(iv) Options exercisable only upon death, disability, mental

incompetency, or retirement. An option entered into between

stockholders of a corporation (or a stockholder and the corporation)

with respect to stock of either stockholder, that is exercisable only

upon the death, disability, mental incompetency of the stockholder, or,

in the case of stock acquired in connection with the performance of

services for the corporation or a related person (and that is not

excessive by reference to the services performed), the stockholder's

retirement.

(v) Rights of first refusal. A bona fide right of first refusal

with customary terms, entered into between stockholders of a

corporation (or between the corporation and a stockholder), and

regarding the corporation's stock.

(vi) Options designated in the Internal Revenue Bulletin. An option

designated by the Internal Revenue Service in the Internal Revenue

Bulletin as being exempt from one or more of the ownership, control, or

income tests. See Sec. 601.601(d)(2)(ii) of this chapter (relating to

the Internal Revenue Bulletin).

(8) Additional rules--(i) Contracts to acquire stock. For purposes

of this paragraph (d), a contract is considered to be issued or

transferred on the date it is entered into or assigned, respectively.

(ii) Indirect transfer of an option. If an entity is formed or

availed of for a principal purpose of facilitating an indirect transfer

of an option by issuing or transferring interests in the entity, an

issuance or transfer of an interest in the entity will be treated as a

transfer of the option for purposes of applying the ownership, control,

and income tests of paragraphs (d) (3) through (5) of this section.

(iii) Options related to interests in non-corporate entities. The

rules of this paragraph (d) apply, with appropriate adjustments, to

options to acquire or transfer interests in non-corporate entities.

(iv) Puts. In applying the rules of this section to puts,

appropriate adjustments must be made to take into account that the put

provides its holder with a right to transfer, instead of acquire,

stock.

(9) Definition of option--(i) In general. Any contingent purchase,

warrant, convertible debt, put, stock subject to a risk of forfeiture,

contract to acquire stock, or similar interest is treated as an option

for purposes of this paragraph (d), regardless of whether it is

contingent or otherwise not currently exercisable.

(ii) Convertible stock. Convertible stock is treated as an option

for purposes of this paragraph (d) (in addition to being treated as

stock under Sec. 1.382-2(a)(3)(ii)) only if the terms of the conversion

feature permit or require consideration other than the stock being

converted.

(iii) Series of options. For purposes of this paragraph (d), an

option to acquire an option with respect to the stock of the loss

corporation, and each one of a series of such options, is treated as an

option to acquire such stock.

(iv) General principles of tax law. This paragraph (d) does not

affect the determination under general principles of tax law (such as

substance over form) of whether an instrument is an option or stock.

(10) Subsequent treatment of options treated as exercised on a

change date--(i) In general. The following rules apply to options that

are treated as exercised under paragraph (d)(2) of this section on a

change date:

(A) The option is not treated as exercised under paragraph (d)(2)

of this section on any testing date after the change date and prior to

a transfer of the option that would itself (i.e., without regard to the

purposes for the issuance or any prior transfers of the option) cause

the option to satisfy the ownership test of paragraph (d)(3) of this

section, the control test of paragraph (d)(4) of this section, or the

income test of paragraph (d)(5) of this section; and

(B) The exercise of the option, if by the person who owned the

option immediately after the ownership change (or by a transferee of

the option who acquired the option, directly or indirectly, from that

person in one or more transfers described in paragraph (d)(11) of this

section), does not contribute to another ownership change on any

testing date on or after the date of exercise.

(ii) Alternative look-back rule for options exercised within 3

years after change date. If a loss corporation, on its return, as

originally filed, for a taxable year that includes a change date,

properly treats an option as exercised under paragraph (d)(2) of this

section on the change date, and the option is actually exercised within

three years after the change date, the loss corporation may treat the

rules of paragraph (d)(10)(i) of this section as inapplicable to the

option and instead treat the option as having been exercised on the

change date for the purpose of determining whether an ownership change

occurs on any and all testing dates after the change date (filing such

amended returns as may be necessary for taxable years ending after the

change date and before the date of exercise of the option). A transfer

after the change date of an option to which this paragraph (d)(10)(ii)

applies is treated as a transfer of the stock subject to the option.

The exercise of an option to which this paragraph (d)(10)(ii) applies

is not taken into account for the purpose of determining whether an

ownership change occurs on or after the date of exercise.

(11) Transfers not subject to deemed exercise. Paragraph (d)(2) of

this section does not apply to the transfer of an option (including a

transfer described in paragraph (d)(8)(i) or (ii) of this section),

if--

(i) Neither the transferor nor the transferee is a 5-percent

shareholder and neither person would be a 5-percent shareholder if all

options held by that person to acquire stock were treated as exercised;

(ii) The transfer is between members of separate public groups

resulting from the application of the segregation rules of Sec. 1.382-

2T(j)(2) and (3)(iii); or

(iii) The transfer occurs in any of the circumstances described in

section 382(l)(3)(B) (relating to stock acquired by reason of death,

gift, divorce, separation, etc.).

(12) Certain rules regarding non-stock interests as stock. Section

1.382-2T(f)(18)(iii) does not apply to treat an option (whether or not

treated as exercised under this paragraph (d)) as stock.

(e) Stock transferred under certain agreements. [Reserved]

(f) Family attribution. [Reserved]

(g) Definitions. The terms and nomenclature used in this section,

and not otherwise defined herein, have the same meaning as in section

382 and the regulations thereunder.

(h) Effective date--(1) In general. [Reserved]

(2) Option attribution rules--(i) General rule. The rules of

paragraph (d) of this section apply, instead of the rules of

Sec. 1.382-2T(h)(4), on any testing date on or after November 5, 1992.

See paragraph (h)(2)(vi) of this section for an election relating to

the effective date.

(ii) Special rule for control test. An option issued on or before

March 17, 1994, or an option issued within 60 days after that date

pursuant to a plan existing before that date, is not treated as

exercised under the control test provided in paragraph (d)(4) of this

section on any testing date prior to a transfer of the option after

March 17, 1994 that would itself cause the option to satisfy the

control test.

(iii) Convertible stock issued prior to July 20, 1988--(A) In

general. Except as provided in paragraph (h)(2)(iii)(B) of this

section, convertible stock issued prior to July 20, 1988, is not

treated as an option subject to the rules of Sec. 1.382-2T(h)(4) or

paragraph (d)(2) of this section.

(B) Exceptions--(1) Nonvoting convertible preferred stock.

Convertible stock issued prior to July 20, 1988, is treated as an

option subject to the rules of Sec. 1.382-2T(h)(4) or paragraph (d)(2)

of this section if--

(i) The stock, when issued, would be described in section

1504(a)(4) by disregarding subparagraph (D) thereof and by ignoring the

potential participation in corporate growth that the conversion feature

may offer; and

(ii) The loss corporation makes the election described in Notice

88-67, 1988-1 C.B. 555 (see Sec. 601.601(d)(2)(ii)(b) of this chapter

for availability of Cumulative Bulletins (C.B.)), on or before the

earlier of the date prescribed in Notice 88-67 or December 7, 1992.

(2) Other convertible stock. Convertible stock issued prior to July

20, 1988, is treated as an option subject to the rules of Sec. 1.382-

2T(h)(4) or paragraph (d)(2) of this section if--

(i) The terms of the conversion feature permit or require the

tender of consideration other than the stock being converted; and

(ii) The loss corporation makes the election described in Notice

88-67 on or before the date prescribed in the Notice.

(iv) Convertible stock issued on or after July 20, 1988, and before

November 5, 1992. Convertible stock issued on or after July 20, 1988,

and before November 5, 1992, is treated as an option subject to the

rules of Sec. 1.382-2T(h)(4) or paragraph (d) of this section only if--

(A) The stock, when issued, would be described in section

1504(a)(4) by disregarding subparagraph (D) thereof and by ignoring the

potential participation in corporate growth that the conversion feature

may offer; or

(B) The terms of the conversion feature permit or require the

tender of consideration other than the stock being converted.

(v) Certain options in existence immediately before and after an

ownership change. If an option existed immediately before and after an

ownership change occurring on a testing date to which Sec. 1.382-

2T(h)(4) applies--

(A) The option is not treated as exercised under paragraph (d)(2)

of this section on any testing date after the change date and prior to

a transfer of the option that would itself cause the option to satisfy

the ownership test of paragraph (d)(3) of this section, the control

test of paragraph (d)(4) of this section, or the income test of

paragraph (d)(5) of this section; and

(B) Except as provided in Sec. 1.382-2T(m)(4)(vi) (which relates to

the effective date of the rules provided in Sec. 1.382-2T(h)(4) and

includes a special rule related to options that are actually exercised

within 120 days after they are treated as exercised under that

section), the actual exercise of the option, if by the person who owned

the option immediately after the ownership change (or by a transferee

of the option who acquired the option, directly or indirectly, from

that person in one or more transfers described in paragraph (d)(11) of

this section), will not contribute to an ownership change on any

testing date on or after the date of exercise.

(vi) Election to apply Sec. 1.382-2T(h)(4)--(A) In general. If a

loss corporation makes an election under this paragraph (h)(2)(vi),

Secs. 1.382-2T(a)(2)(i) and (h)(4) (relating to testing dates and

option attribution) apply (instead of the definition of testing date in

Sec. 1.382-2(a)(4) and paragraph (d) of this section) for the purpose

of determining whether an ownership change occurs--

(1) On any testing date on or before May 17, 1994, or

(2) In the case of a loss corporation that is under the

jurisdiction of a court in a title 11 or similar case filed on or

before May 17, 1994, subject to Sec. 1.382-9(o)(1), on any testing date

at or before the time the plan of reorganization becomes effective.

(B) Additional consequences of election. If a loss corporation

makes an election under this paragraph (h)(2)(vi)--

(1) In determining whether any convertible preferred stock issued

by the loss corporation during the period that the election is in

effect is treated as stock or as an option, the convertible preferred

stock is treated as if it were issued on November 4, 1992, and

(2) The special effective date for the control test provided in

paragraph (h)(2)(ii) of this section does not apply to any option with

respect to stock of the loss corporation.

(C) Time and manner of making the election. The election described

in paragraph (h)(2)(vi)(A) of this section is made by attaching a

statement to the loss corporation's income tax return for the first

taxable year ending after November 4, 1992, in which a testing date

(within the meaning of Sec. 1.382-2T(a)(2)(i)) occurs, or if such

return is filed on or before May 17, 1994, with its first return filed

after May 17, 1994. However, a loss corporation that is under the

jurisdiction of a court in a title 11 or similar case filed on or

before May 17, 1994, may make the election described in paragraph

(h)(2)(vi)(A) by attaching a statement to its tax return for its first

taxable year ending after that date. The statement must say ``THIS IS

AN ELECTION UNDER Sec. 1.382-4(h)(2)(vi) TO APPLY Sec. 1.382-2T(h)(4)

ON OR AFTER NOVEMBER 5, 1992.'' Any amended returns required by

paragraph (h)(2)(vi)(D) of this section must accompany the return with

which the election is made. An election under paragraph (h)(2)(vi)(A)

of this section is irrevocable.

(D) Amended returns. If an election under this paragraph (h)(2)(vi)

affects the amount of taxable income or loss for a prior taxable year,

the loss corporation (or the common parent of any consolidated group of

which the loss corporation was a member for the year) must file an

amended return for the year that reflects the effect of the election.

(3) Special rule for options subject to attribution under

Sec. 1.382-2T(h)(4). Section Sec. 1.382-2T(h)(4)(i) does not apply to

any option designated by the Internal Revenue Service in the Internal

Revenue Bulletin as being excepted from the operation of Sec. 1.382-

2T(h)(4)(i).

Par. 6. Section 1.382-9(o)(1) is revised to read as follows:

Sec. 1.382-9. Special rules under section 382 for corporations under

the jurisdiction of a court in a title 11 or similar case.

* * * * *

(o) Treatment of certain options for ownership change purposes--(1)

Neither Sec. 1.382-2T(h)(4)(i) nor Sec. 1.382-4(d) (relating to the

treatment of options as exercised) applies to the following options to

acquire stock of a loss corporation reorganized pursuant to a plan of

reorganization that is confirmed in a title 11 or similar case (within

the meaning of section 368(a)(3)(A)) but only until the time the plan

becomes effective--

(i) Any option created by the solicitation or receipt of

acceptances to the plan;

(ii) The option created by the confirmation of the plan; and

(iii) Any option created under the plan.

* * * * *

PART 602--OMB CONTROL NUMBERS UNDER THE PAPERWORK REDUCTION ACT

Par. 7. The authority citation for part 602 continues to read as

follows:

Authority: 26 U.S.C. 7805.

Par. 8. Section 602.101(c) is amended by adding the entry for

``1.382-4'' in the table to read as follows:

Sec. 602.101 OMB Control numbers.

* * * * *

(c) * * *

------------------------------------------------------------------------

Current OMB

CFR part or section where identified and described control No.

------------------------------------------------------------------------

*****

1.382-4.................................................... 1545-1120

*****

------------------------------------------------------------------------

Margaret Milner Richardson,

Commissioner of Internal Revenue.

Approved: February 24, 1994.

Leslie Samuels,

Assistant Secretary of the Treasury (Tax Policy).

[FR Doc. 94-6088 Filed 3-17-94; 8:45 am]

BILLING CODE 4830-01-U