Facts Both Subsidiary and Corporation were incorporated in Massachusetts. Corporation is an S corporation by reason of an S election made for the taxable year ended December 31, 1987.
Subsidiary is engaged in an engineering business.
This classification was granted March 12, 1992. During 1992, prior to this ruling request, Corporation sought to sell the Shares. At one point, Corporation was close to completing a deal to sell the Shares to an unaffiliated corporation. This deal fell through. Subsequently, Corporation planned to sell the Shares to Subsidiary as part of a leveraged management buyout.