Nye Tools, incorporated in 2005, makes tools and devices for the automotive industry. The original shareholders were Andre (700 shares) and his brother Roscoe (300 shares). In 2010, Andre transferred 100 shares to his wife and Roscoe sold 50 shares to a business associate. In June 2014, Nye spun off the devices division, creating Nye Devices. In this transaction, Andre exchanged 500 shares of Tools for 500 shares of Devices. Roscoe did not receive any shares of Devices. Wanting to relinquish all ownership of Nye Tools, Andre and his wife sold their remaining 200 shares to Roscoe in 2015.
From 2013 to 2015, Nye Tools accumulated substantial business credits, which it could not fully utilize. Finally, in 2016, Tools incurred sufficient tax liability to offset all of its business credit carryovers. The IRS audited Nye Tools's 2016 return and is questioning whether the business credit carryovers should be limited due to an ownership change. Roscoe believes there has been no ownership change because of stock attribution rules.
Determine whether Roscoe should try to negotiate with the IRS or litigate over the business credit issue. Support your analysis with citations to primary tax sources.