Under Treas. Reg. § 1.382-2T(g)(1), the term “5-percent shareholder” includes:
(i) an individual who owns either a direct ownership interest in the stock of the loss corporation of 5 percent or more, or an indirect interest (determined based on the constructive ownership rules in section 318, as modified under section 382(l)(3)(A)) in the stock of the loss corporation of 5 percent or more by virtue of an ownership interest in any one first-tier entity or higher-tier entity (discussed below); and
In addition, a group of persons who have a formal or informal understanding among themselves to make a coordinated acquisition of 5 percent or more of the stock of the loss corporation (the “Coordinated Acquisition Group”) are treated as an entity, the owners of which can also be collectively treated as a 5-percent shareholder.
5-percent shareholders generally do not include certain institutional holders, such as mutual fund companies, that hold loss corporation stock on behalf of several individual mutual funds where no single fund owns 5 percent or more of such stock.