The IRS recently issued proposed regulations under section 382(g) addressing application of the segregation rules of Reg. sec. 1.382-2T(j) to public groups. If adopted, the proposed regulations would render the segregation rules inapplicable to certain transactions involving less-than-five-percent shareholders (small shareholders).
The proposed regulations would apply prospectively from the date the regulations become final. Comments on the proposed regulations and requests for a public hearing must be submitted to the IRS by February 21, 2012.