such individual is a 10-percent share-
holder, over
‘‘(ii) the aggregate of the losses for
the taxable year from dispositions of such
stock.
‘‘(C) 
COORDINATION
WITH
SECTION
897(a)(2).—Section 897(a)(2)(A) shall not apply
to any nonresident alien individual for any tax-
able year for which such individual has a net
taxable stock gain, but the amount of such net
taxable stock gain shall be increased by the
amount of such individual’s net United States
real property gain (as defined in section
897(a)(2)(B)) for such taxable year.
‘‘(b) 10-PERCENT SHAREHOLDER.—
‘‘(1) IN GENERAL.—For purposes of this sec-
tion, the term ‘10-percent shareholder’ means any
person who at any time during the shorter of—
‘‘(A) the period beginning on January 1,
1995, and ending on the date of the disposition,
or
‘‘(B) the 5-year period ending on the date
of the disposition,
owned 10 percent or more (by vote or value) of the
stock in the domestic corporation.
‘‘(2) CONSTRUCTIVE OWNERSHIP.—
‘‘(A) IN GENERAL.—Section 318(a) (relat-
ing to constructive ownership of stock) shall
apply for purposes of paragraph (1).
‘‘(B) MODIFICATIONS.—For purposes of
subparagraph (A)—
‘‘(i) paragraph (2)(C) of section
318(a) shall be applied by substituting ‘10
percent’ for ‘50 percent’, and
‘‘(ii) paragraph (3)(C) of section
318(a) shall be applied—
‘‘(I) by substituting ‘10 percent’
for ‘50 percent’, and
‘‘(II) in any case where such
paragraph would not apply but for
subclause (I), by considering a cor-
poration as owning the stock (other
than stock in such corporation) owned
by or for any shareholder of such cor-
poration in that proportion which the
value of the stock which such share-
holder owns in such corporation bears
to the value of all stock in such cor-
poration.
‘‘(3) TREATMENT OF STOCK HELD BY CERTAIN
PARTNERSHIPS.—
‘‘(A) IN GENERAL.—For purposes of this
section, if—
‘‘(i) a partnership is a 10-percent
shareholder in any domestic corporation,
and
‘‘(ii) 10 percent or more of the capital
or profits interests in such partnership is
held (directly or indirectly) by nonresident
alien individuals or foreign corporations,
each partner in such partnership who is not
otherwise a 10-percent shareholder in such cor-
poration shall, with respect to the stock in such
corporation held by the partnership, be treated
as a 10-percent shareholder in such corpora-
tion.
‘‘(B) EXCEPTION.—
‘‘(i) IN GENERAL.—Subparagraph (A)
shall not apply with respect to stock in a
domestic corporation held by any partner-
ship if, at all times during the 5-year pe-
riod ending on the date of the disposition
involved—
‘‘(I) the aggregate bases of the
stock and securities in such domestic
corporation held by such partnership
were less than 25 percent of the part-
nership’s net adjusted asset cost, and
‘‘(II) the partnership did not own
50 percent or more (by vote or value)
of the stock in such domestic corpora-
tion.
The Secretary may by regulations dis-
regard any failure to meet the require-
ments of subclause (I) where the partner-
ship normally met such requirements dur-
ing such 5-year period.
‘‘(ii) NET ADJUSTED ASSET COST.—
For purposes of clause (i), the term ‘net
adjusted asset cost’ means—
‘‘(I) the aggregate bases of all of
the assets of the partnership other
than cash and cash items, reduced by
‘‘(II) the portion of the liabilities
of the partnership not allocable (on a
proportionate basis) to assets excluded
under subclause (I).
‘‘(C) EXCEPTION NOT TO APPLY TO 50-
PERCENT PARTNERS.—Subparagraph (B) shall
not apply in the case of any partner owning (di-
rectly or indirectly) more than 50 percent of the
capital or profits interests in the partnership at
any time during the 5-year period ending on the
date of the disposition.
‘‘(D) SPECIAL
RULES.—For purposes of
subparagraphs (B) and (C)—
‘‘(i) 
TREATMENT
OF
PREDE-
CESSORS.—Any reference to a partnership
or corporation shall be treated as including
a reference to any predecessor thereof.
‘‘(ii) PARTNERSHIP
NOT
IN
EXIST-
ENCE.—If any partnership was not in ex-
istence throughout the entire 5-year period
ending on the date of the disposition, only
the portion of such period during which
the partnership (or any predecessor) was
in existence shall be taken into account.
‘‘(E) 
OTHER
PASS-THRU
ENTITIES;
TIERED ENTITIES.—Rules similar to the rules
of the preceding provisions of this paragraph
shall also apply in the case of any pass-thru en-