Nomenclature and assumptions.
Nomenclature and assumptions. For purposes of the example in this section
(1) L is a loss corporation, and, if there is more than one loss corporation, they are designated as L1, L2, L3, etc.
(2) P is a corporation that is not a loss corporation, and, if there is more than one such corporation, they are designated as P1, P2, P3, etc.
(3) HC is a corporation whose assets consist solely of the stock of other corporations.
(4) E is an entity other than a corporation (e.g., a partnership), and, if there is more than one such entity, they are designated as E1, E2, E3, etc.
(5) Unless otherwise stated—
(i) A, B, C, D, AA, BB, CC, and DD are unrelated individuals who own interests in corporations or other entities only to the extent expressly stated,
(ii) All corporations have one class of stock outstanding and each share of stock has the same fair market value as each other share,
(iii) The capital structure of the loss corporation and its business do not change over time, and
(iv) The rules of paragraphs (k)(2) and (4) of this section are not applicable.
(6) Public L represents a group of unrelated individuals and entities that own direct (and not indirect) stock ownership interests in loss corporation L, each of whom owns less than five percent of the stock of the loss corporation, and, if there is more than one loss corporation, such groups are designated as Public L1, Public L2, Public L3, etc.
(7) Public P represents a group of unrelated individuals and entities that own direct (and not indirect) stock ownership interests in corporation P, each of whom owns less than five percent of the stock of the corporation, and, if there is more than one corporation, such groups are designated as Public P1, P2, P3, etc.
(8) Public E represents a group of unrelated individuals and entities that own direct (and not indirect) ownership interests in entity E, each of whom owns less than five percent of the entity, and, if there is more than one entity, such groups are designated as Public E1, Public E2, Public E3, etc.