internal_revenue_service department of the treasury number release date index number washington dc person to contact telephone number refer reply to cc corp 1-plr-107595-02 date date re holding_company corporation corporation corporation corporation corporation corporation corporation plr-107595-02 corporation corporation corporation corporation shareholder shareholder shareholder shareholder shareholder shareholder shareholder shareholder shareholder shareholder plr-107595-02 shareholder shareholder shareholder shareholder shareholder shareholder shareholder shareholder shareholder shareholder shareholder shareholder shareholder shareholder shareholder shareholder shareholder shareholder plr-107595-02 shareholder shareholder shareholder shareholder shareholder shareholder shareholder state x business y dear this letter is in reply to your letter dated date requesting rulings with respect to a plan_of_reorganization described below additional information was submitted in letters dated april and date the information submitted for consideration is summarized below corporation corporation corporation corporation corporation corporation corporation corporation corporation corporation10 and corporation collectively the corporations are state x that have elected to be taxed as subchapter_s_corporations for federal_income_tax purposes the corporations are each engaged in business y the corporations are owned by a group of partially related shareholders shareholder through shareholder collectively the shareholders holding_company is a newly formed state x corporation holding_company has elected to be taxed as a subchapter_s_corporation currently each of the shareholders owns one share of stock in holding_company holding_company was formed in order to complete the proposed transaction the parties represent that in order to accomplish corporate business purposes they desire to consolidate the operations of the corporations to accomplish these plr-107595-02 goals they intend to complete the following proposed transaction the proposed transaction the shareholders will simultaneously transfer percent of the stock of corporation through corporation to holding_company the contribution each shareholder will receive additional holding_company shares such that each shareholder will own shares in holding_company proportional to the value of their shares in corporation through corporation transferred to holding_company holding_company will elect to treat each of corporation through corporation as qualified subchapter_s subsidiaries the qsub elections for federal_income_tax purposes the qsub elections will result in the deemed liquidations of corporation sec_1 through into holding_company the liquidations the parties have submitted the following representations with respect to the portion of the proposed transaction involving corporation the corporation proposed transaction a1 the fair_market_value of the holding_company stock received by each corporation shareholder will be approximately equal to the fair_market_value of the corporation stock deemed surrendered in the exchange b1 there is no plan or intention by the shareholders of corporation who own one percent or more of the corporation stock and to the best of the knowledge of the management of corporation there is no plan or intention on the part of the remaining shareholders of corporation to sell exchange or otherwise dispose_of a number of shares of holding_company stock received in the transaction that would reduce the corporation shareholders' ownership of holding_company stock to a number of shares having a value as of the date of the transaction of less than percent of the value of all of the formerly outstanding_stock of corporation as of the same date for purposes of this representation shares of corporation stock exchanged for cash or other_property or exchanged for cash in lieu of fractional shares of holding_company stock will be treated as outstanding corporation stock on the date of the transaction moreover shares of corporation stock and shares of holding_company stock held by corporation shareholders and otherwise sold redeemed or disposed of prior or subsequent to the transaction will be considered in making this representation plr-107595-02 c1 holding_company will acquire at least percent of the fair_market_value of the net assets and at least percent of the fair_market_value of the gross assets held by corporation immediately prior to the transaction for purposes of this representation amounts used by corporation to pay its reorganization expenses all redemptions and any distributions except for regular normal dividends made by corporation immediately preceding the transfer will be included as assets of corporation held immediately prior to the transaction d1 after the transaction the shareholders of corporation will be in control of holding_company within the meaning of sec_368 of the code e1 holding_company has no plan or intention to reacquire any of its stock issued in the transaction f1 holding_company has no plan or intention to sell or otherwise dispose_of any of the assets of corporation acquired in the transaction except for dispositions made in the ordinary course of business g1 the liabilities of corporation transferred to holding_company plus the liabilities if any to which the transferred assets are subject were incurred by corporation in the ordinary course of its business and are associated with the assets transferred h1 following the transaction holding_company will continue the historic_business of corporation or use a significant portion of the historic_business_assets of corporation in a business j1 at the time of the transaction holding_company will not have outstanding any warrants options convertible securities or any other type of right pursuant to which any person could acquire stock in holding_company that if exercised or converted would affect the corporation shareholders’ acquisition or retention of control of holding_company as defined in sec_368 of the code k1 holding_company corporation and the shareholders of corporation will pay their respective expenses if any incurred in connection with the transaction l1 there is no intercorporate indebtedness existing between holding_company and corporation that was issued acquired or will be settled at a discount m1 no two parties to the transaction are investment companies as defined in plr-107595-02 sec_368 and iv of the code n1 the fair_market_value of the assets of corporation transferred to holding_company will equal or exceed the sum of the liabilities transferred to holding_company plus the amount of liabilities if any to which the transferred assets are subject o1 the total adjusted_basis of the assets of corporation transferred to holding_company will equal or exceed the sum of the liabilities to be transferred to holding_company plus the amount of liabilities if any to which the transferred assets are subject p1 corporation is not under the jurisdiction of a court in a title_11_or_similar_case within the meaning of sec_368 of the code the parties have submitted the following representations with respect to the portion of the proposed transaction involving corporation the corporation proposed transaction a2 the fair_market_value of the holding_company stock received by each corporation shareholder will be approximately equal to the fair_market_value of the corporation stock deemed surrendered in the exchange b2 there is no plan or intention by the shareholders of corporation who own one percent or more of the corporation stock and to the best of the knowledge of the management of corporation there is no plan or intention on the part of the remaining shareholders of corporation to sell exchange or otherwise dispose_of a number of shares of holding_company stock received in the transaction that would reduce the corporation shareholders' ownership of holding_company stock to a number of shares having a value as of the date of the transaction of less than percent of the value of all of the formerly outstanding_stock of corporation as of the same date for purposes of this representation shares of corporation stock exchanged for cash or other_property or exchanged for cash in lieu of fractional shares of holding_company stock will be treated as outstanding corporation stock on the date of the transaction moreover shares of corporation stock and shares of holding_company stock held by corporation shareholders and otherwise sold redeemed or disposed of prior or subsequent to the transaction will be considered in making this representation c2 holding_company will acquire at least percent of the fair_market_value of the net assets and at least percent of the fair_market_value of the gross assets held by corporation immediately prior to the transaction plr-107595-02 for purposes of this representation amounts used by corporation to pay its reorganization expenses all redemptions and any distributions except for regular normal dividends made by corporation immediately preceding the transfer will be included as assets of corporation held immediately prior to the transaction d2 after the transaction the shareholders of corporation will be in control of holding_company within the meaning of sec_368 of the code e2 holding_company has no plan or intention to reacquire any of its stock issued in the transaction f2 holding_company has no plan or intention to sell or otherwise dispose_of any of the assets of corporation acquired in the transaction except for dispositions made in the ordinary course of business g2 the liabilities of corporation transferred to holding_company plus the liabilities if any to which the transferred assets are subject were incurred by corporation in the ordinary course of its business and are associated with the assets transferred h2 following the transaction holding_company will continue the historic_business of corporation or use a significant portion of the historic_business_assets of corporation in a business j2 at the time of the transaction holding_company will not have outstanding any warrants options convertible securities or any other type of right pursuant to which any person could acquire stock in holding_company that if exercised or converted would affect the corporation shareholders’ acquisition or retention of control of holding_company as defined in sec_368 of the code k2 holding_company corporation and the shareholders of corporation will pay their respective expenses if any incurred in connection with the transaction l2 there is no intercorporate indebtedness existing between holding_company and corporation that was issued acquired or will be settled at a discount m2 no two parties to the transaction are investment companies as defined in sec_368 and iv of the code n2 the fair_market_value of the assets of corporation transferred to holding plr-107595-02 company will equal or exceed the sum of the liabilities transferred to holding_company plus the amount of liabilities if any to which the transferred assets are subject o2 the total adjusted_basis of the assets of corporation transferred to holding_company will equal or exceed the sum of the liabilities to be transferred to holding_company plus the amount of liabilities if any to which the transferred assets are subject p2 corporation is not under the jurisdiction of a court in a title_11_or_similar_case within the meaning of sec_368 of the code the parties have submitted the following representations with respect to the portion of the proposed transaction involving corporation the corporation proposed transaction a3 the fair_market_value of the holding_company stock received by each corporation shareholder will be approximately equal to the fair_market_value of the corporation stock deemed surrendered in the exchange b3 there is no plan or intention by the shareholders of corporation who own one percent or more of the corporation stock and to the best of the knowledge of the management of corporation there is no plan or intention on the part of the remaining shareholders of corporation to sell exchange or otherwise dispose_of a number of shares of holding_company stock received in the transaction that would reduce the corporation shareholders' ownership of holding_company stock to a number of shares having a value as of the date of the transaction of less than percent of the value of all of the formerly outstanding_stock of corporation as of the same date for purposes of this representation shares of corporation stock exchanged for cash or other_property or exchanged for cash in lieu of fractional shares of holding_company stock will be treated as outstanding corporation stock on the date of the transaction moreover shares of corporation stock and shares of holding_company stock held by corporation shareholders and otherwise sold redeemed or disposed of prior or subsequent to the transaction will be considered in making this representation c3 holding_company will acquire at least percent of the fair_market_value of the net assets and at least percent of the fair_market_value of the gross assets held by corporation immediately prior to the transaction for purposes of this representation amounts used by corporation to pay its reorganization expenses all redemptions and any distributions except for regular normal dividends made by corporation immediately plr-107595-02 preceding the transfer will be included as assets of corporation held immediately prior to the transaction d3 after the transaction the shareholders of corporation will be in control of holding_company within the meaning of sec_368 of the code e3 holding_company has no plan or intention to reacquire any of its stock issued in the transaction f3 holding_company has no plan or intention to sell or otherwise dispose_of any of the assets of corporation acquired in the transaction except for dispositions made in the ordinary course of business g3 the liabilities of corporation transferred to holding_company plus the liabilities if any to which the transferred assets are subject were incurred by corporation in the ordinary course of its business and are associated with the assets transferred h3 following the transaction holding_company will continue the historic_business of corporation or use a significant portion of the historic_business_assets of corporation in a business j3 at the time of the transaction holding_company will not have outstanding any warrants options convertible securities or any other type of right pursuant to which any person could acquire stock in holding_company that if exercised or converted would affect the corporation shareholders’ acquisition or retention of control of holding_company as defined in sec_368 of the code k3 holding_company corporation and the shareholders of corporation will pay their respective expenses if any incurred in connection with the transaction l3 there is no intercorporate indebtedness existing between holding_company and corporation that was issued acquired or will be settled at a discount m3 no two parties to the transaction are investment companies as defined in sec_368 and iv of the code n3 the fair_market_value of the assets of corporation transferred to holding_company will equal or exceed the sum of the liabilities transferred to holding_company plus the amount of liabilities if any to which the transferred assets are subject plr-107595-02 o3 the total adjusted_basis of the assets of corporation transferred to holding_company will equal or exceed the sum of the liabilities to be transferred to holding_company plus the amount of liabilities if any to which the transferred assets are subject p3 corporation is not under the jurisdiction of a court in a title_11_or_similar_case within the meaning of sec_368 of the code the parties have submitted the following representations with respect to the portion of the proposed transaction involving corporation the corporation proposed transaction a4 the fair_market_value of the holding_company stock received by each corporation shareholder will be approximately equal to the fair_market_value of the corporation stock deemed surrendered in the exchange b4 there is no plan or intention by the shareholders of corporation who own one percent or more of the corporation stock and to the best of the knowledge of the management of corporation there is no plan or intention on the part of the remaining shareholders of corporation to sell exchange or otherwise dispose_of a number of shares of holding_company stock received in the transaction that would reduce the corporation shareholders' ownership of holding_company stock to a number of shares having a value as of the date of the transaction of less than percent of the value of all of the formerly outstanding_stock of corporation as of the same date for purposes of this representation shares of corporation stock exchanged for cash or other_property or exchanged for cash in lieu of fractional shares of holding_company stock will be treated as outstanding corporation stock on the date of the transaction moreover shares of corporation stock and shares of holding_company stock held by corporation shareholders and otherwise sold redeemed or disposed of prior or subsequent to the transaction will be considered in making this representation c4 holding_company will acquire at least percent of the fair_market_value of the net assets and at least percent of the fair_market_value of the gross assets held by corporation immediately prior to the transaction for purposes of this representation amounts used by corporation to pay its reorganization expenses all redemptions and any distributions except for regular normal dividends made by corporation immediately preceding the transfer will be included as assets of corporation held immediately prior to the transaction d4 after the transaction the shareholders of corporation will be in control plr-107595-02 of holding_company within the meaning of sec_368 of the code e4 holding_company has no plan or intention to reacquire any of its stock issued in the transaction f4 holding_company has no plan or intention to sell or otherwise dispose_of any of the assets of corporation acquired in the transaction except for dispositions made in the ordinary course of business g4 the liabilities of corporation transferred to holding_company plus the liabilities if any to which the transferred assets are subject were incurred by corporation in the ordinary course of its business and are associated with the assets transferred h4 following the transaction holding_company will continue the historic_business of corporation or use a significant portion of the historic_business_assets of corporation in a business j4 at the time of the transaction holding_company will not have outstanding any warrants options convertible securities or any other type of right pursuant to which any person could acquire stock in holding_company that if exercised or converted would affect the corporation shareholders’ acquisition or retention of control of holding_company as defined in sec_368 of the code k4 holding_company corporation and the shareholders of corporation will pay their respective expenses if any incurred in connection with the transaction l4 there is no intercorporate indebtedness existing between holding_company and corporation that was issued acquired or will be settled at a discount m4 no two parties to the transaction are investment companies as defined in sec_368 and iv of the code n4 the fair_market_value of the assets of corporation transferred to holding_company will equal or exceed the sum of the liabilities transferred to holding_company plus the amount of liabilities if any to which the transferred assets are subject o4 the total adjusted_basis of the assets of corporation transferred to holding_company will equal or exceed the sum of the liabilities to be transferred to holding_company plus the amount of liabilities if any to plr-107595-02 which the transferred assets are subject p4 corporation is not under the jurisdiction of a court in a title_11_or_similar_case within the meaning of sec_368 of the code the parties have submitted the following representations with respect to the portion of the proposed transaction involving corporation the corporation proposed transaction a5 the fair_market_value of the holding_company stock received by each corporation shareholder will be approximately equal to the fair_market_value of the corporation stock deemed surrendered in the exchange b5 there is no plan or intention by the shareholders of corporation who own one percent or more of the corporation stock and to the best of the knowledge of the management of corporation there is no plan or intention on the part of the remaining shareholders of corporation to sell exchange or otherwise dispose_of a number of shares of holding_company stock received in the transaction that would reduce the corporation shareholders' ownership of holding_company stock to a number of shares having a value as of the date of the transaction of less than percent of the value of all of the formerly outstanding_stock of corporation as of the same date for purposes of this representation shares of corporation stock exchanged for cash or other_property or exchanged for cash in lieu of fractional shares of holding_company stock will be treated as outstanding corporation stock on the date of the transaction moreover shares of corporation stock and shares of holding_company stock held by corporation shareholders and otherwise sold redeemed or disposed of prior or subsequent to the transaction will be considered in making this representation c5 holding_company will acquire at least percent of the fair_market_value of the net assets and at least percent of the fair_market_value of the gross assets held by corporation immediately prior to the transaction for purposes of this representation amounts used by corporation to pay its reorganization expenses all redemptions and any distributions except for regular normal dividends made by corporation immediately preceding the transfer will be included as assets of corporation held immediately prior to the transaction d5 after the transaction the shareholders of corporation will be in control of holding_company within the meaning of sec_368 of the code plr-107595-02 e5 holding_company has no plan or intention to reacquire any of its stock issued in the transaction f5 holding_company has no plan or intention to sell or otherwise dispose_of any of the assets of corporation acquired in the transaction except for dispositions made in the ordinary course of business g5 the liabilities of corporation transferred to holding_company plus the liabilities if any to which the transferred assets are subject were incurred by corporation in the ordinary course of its business and are associated with the assets transferred h5 following the transaction holding_company will continue the historic_business of corporation or use a significant portion of the historic_business_assets of corporation in a business j5 at the time of the transaction holding_company will not have outstanding any warrants options convertible securities or any other type of right pursuant to which any person could acquire stock in holding_company that if exercised or converted would affect the corporation shareholders’ acquisition or retention of control of holding_company as defined in sec_368 of the code k5 holding_company corporation and the shareholders of corporation will pay their respective expenses if any incurred in connection with the transaction l5 there is no intercorporate indebtedness existing between holding_company and corporation that was issued acquired or will be settled at a discount m5 no two parties to the transaction are investment companies as defined in sec_368 and iv of the code n5 the fair_market_value of the assets of corporation transferred to holding_company will equal or exceed the sum of the liabilities transferred to holding_company plus the amount of liabilities if any to which the transferred assets are subject o5 the total adjusted_basis of the assets of corporation transferred to holding_company will equal or exceed the sum of the liabilities to be transferred to holding_company plus the amount of liabilities if any to which the transferred assets are subject plr-107595-02 p5 corporation is not under the jurisdiction of a court in a title_11_or_similar_case within the meaning of sec_368 of the code the parties have submitted the following representations with respect to the portion of the proposed transaction involving corporation the corporation proposed transaction a6 the fair_market_value of the holding_company stock received by each corporation shareholder will be approximately equal to the fair_market_value of the corporation stock deemed surrendered in the exchange b6 there is no plan or intention by the shareholders of corporation who own one percent or more of the corporation stock and to the best of the knowledge of the management of corporation there is no plan or intention on the part of the remaining shareholders of corporation to sell exchange or otherwise dispose_of a number of shares of holding_company stock received in the transaction that would reduce the corporation shareholders' ownership of holding_company stock to a number of shares having a value as of the date of the transaction of less than percent of the value of all of the formerly outstanding_stock of corporation as of the same date for purposes of this representation shares of corporation stock exchanged for cash or other_property or exchanged for cash in lieu of fractional shares of holding_company stock will be treated as outstanding corporation stock on the date of the transaction moreover shares of corporation stock and shares of holding_company stock held by corporation shareholders and otherwise sold redeemed or disposed of prior or subsequent to the transaction will be considered in making this representation c6 holding_company will acquire at least percent of the fair_market_value of the net assets and at least percent of the fair_market_value of the gross assets held by corporation immediately prior to the transaction for purposes of this representation amounts used by corporation to pay its reorganization expenses all redemptions and any distributions except for regular normal dividends made by corporation immediately preceding the transfer will be included as assets of corporation held immediately prior to the transaction d6 after the transaction the shareholders of corporation will be in control of holding_company within the meaning of sec_368 of the code e6 holding_company has no plan or intention to reacquire any of its stock issued in the transaction plr-107595-02 f6 holding_company has no plan or intention to sell or otherwise dispose_of any of the assets of corporation acquired in the transaction except for dispositions made in the ordinary course of business g6 the liabilities of corporation transferred to holding_company plus the liabilities if any to which the transferred assets are subject were incurred by corporation in the ordinary course of its business and are associated with the assets transferred h6 following the transaction holding_company will continue the historic_business of corporation or use a significant portion of the historic_business_assets of corporation in a business j6 at the time of the transaction holding_company will not have outstanding any warrants options convertible securities or any other type of right pursuant to which any person could acquire stock in holding_company that if exercised or converted would affect the corporation shareholders’ acquisition or retention of control of holding_company as defined in sec_368 of the code k6 holding_company corporation and the shareholders of corporation will pay their respective expenses if any incurred in connection with the transaction l6 there is no intercorporate indebtedness existing between holding_company and corporation that was issued acquired or will be settled at a discount m6 no two parties to the transaction are investment companies as defined in sec_368 and iv of the code n6 the fair_market_value of the assets of corporation transferred to holding_company will equal or exceed the sum of the liabilities transferred to holding_company plus the amount of liabilities if any to which the transferred assets are subject o6 the total adjusted_basis of the assets of corporation transferred to holding_company will equal or exceed the sum of the liabilities to be transferred to holding_company plus the amount of liabilities if any to which the transferred assets are subject p6 corporation is not under the jurisdiction of a court in a title_11_or_similar_case within the meaning of sec_368 of the code plr-107595-02 the parties have submitted the following representations with respect to the portion of the proposed transaction involving corporation the corporation proposed transaction a7 the fair_market_value of the holding_company stock received by each corporation shareholder will be approximately equal to the fair_market_value of the corporation stock deemed surrendered in the exchange b7 there is no plan or intention by the shareholders of corporation who own one percent or more of the corporation stock and to the best of the knowledge of the management of corporation there is no plan or intention on the part of the remaining shareholders of corporation to sell exchange or otherwise dispose_of a number of shares of holding_company stock received in the transaction that would reduce the corporation shareholders’ ownership of holding_company stock to a number of shares having a value as of the date of the transaction of less than percent of the value of all of the formerly outstanding_stock of corporation as of the same date for purposes of this representation shares of corporation stock exchanged for cash or other_property or exchanged for cash in lieu of fractional shares of holding_company stock will be treated as outstanding corporation stock on the date of the transaction moreover shares of corporation stock and shares of holding_company stock held by corporation shareholders and otherwise sold redeemed or disposed of prior or subsequent to the transaction will be considered in making this representation c7 holding_company will acquire at least percent of the fair_market_value of the net assets and at least percent of the fair_market_value of the gross assets held by corporation immediately prior to the transaction for purposes of this representation amounts used by corporation to pay its reorganization expenses all redemptions and any distributions except for regular normal dividends made by corporation immediately preceding the transfer will be included as assets of corporation held immediately prior to the transaction d7 after the transaction the shareholders of corporation will be in control of holding_company within the meaning of sec_368 of the code e7 holding_company has no plan or intention to reacquire any of its stock issued in the transaction f7 holding_company has no plan or intention to sell or otherwise dispose_of any of the assets of corporation acquired in the transaction except for dispositions made in the ordinary course of business plr-107595-02 g7 the liabilities of corporation transferred to holding_company plus the liabilities if any to which the transferred assets are subject were incurred by corporation in the ordinary course of its business and are associated with the assets transferred h7 following the transaction holding_company will continue the historic_business of corporation or use a significant portion of the historic_business_assets of corporation in a business j7 at the time of the transaction holding_company will not have outstanding any warrants options convertible securities or any other type of right pursuant to which any person could acquire stock in holding_company that if exercised or converted would affect the corporation shareholders’ acquisition or retention of control of holding_company as defined in sec_368 of the code k7 holding_company corporation and the shareholders of corporation will pay their respective expenses if any incurred in connection with the transaction l7 there is no intercorporate indebtedness existing between holding_company and corporation that was issued acquired or will be settled at a discount m7 no two parties to the transaction are investment companies as defined in sec_368 and iv of the code n7 the fair_market_value of the assets of corporation transferred to holding_company will equal or exceed the sum of the liabilities transferred to holding_company plus the amount of liabilities if any to which the transferred assets are subject o7 the total adjusted_basis of the assets of corporation transferred to holding_company will equal or exceed the sum of the liabilities to be transferred to holding_company plus the amount of liabilities if any to which the transferred assets are subject p7 corporation is not under the jurisdiction of a court in a title_11_or_similar_case within the meaning of sec_368 of the code the parties have submitted the following representations with respect to the portion of the proposed transaction involving corporation the corporation proposed transaction plr-107595-02 a8 the fair_market_value of the holding_company stock received by each corporation shareholder will be approximately equal to the fair_market_value of the corporation stock deemed surrendered in the exchange b8 there is no plan or intention by the shareholders of corporation who own one percent or more of the corporation stock and to the best of the knowledge of the management of corporation there is no plan or intention on the part of the remaining shareholders of corporation to sell exchange or otherwise dispose_of a number of shares of holding_company stock received in the transaction that would reduce the corporation shareholders’ ownership of holding_company stock to a number of shares having a value as of the date of the transaction of less than percent of the value of all of the formerly outstanding_stock of corporation as of the same date for purposes of this representation shares of corporation stock exchanged for cash or other_property or exchanged for cash in lieu of fractional shares of holding_company stock will be treated as outstanding corporation stock on the date of the transaction moreover shares of corporation stock and shares of holding_company stock held by corporation shareholders and otherwise sold redeemed or disposed of prior or subsequent to the transaction will be considered in making this representation c8 holding_company will acquire at least percent of the fair_market_value of the net assets and at least percent of the fair_market_value of the gross assets held by corporation immediately prior to the transaction for purposes of this representation amounts used by corporation to pay its reorganization expenses all redemptions and any distributions except for regular normal dividends made by corporation immediately preceding the transfer will be included as assets of corporation held immediately prior to the transaction d8 after the transaction the shareholders of corporation will be in control of holding_company within the meaning of sec_368 of the code e8 holding_company has no plan or intention to reacquire any of its stock issued in the transaction f8 holding_company has no plan or intention to sell or otherwise dispose_of any of the assets of corporation acquired in the transaction except for dispositions made in the ordinary course of business g8 the liabilities of corporation transferred to holding_company plus the liabilities if any to which the transferred assets are subject were incurred by corporation in the ordinary course of its business and are associated plr-107595-02 with the assets transferred h8 following the transaction holding_company will continue the historic_business of corporation or use a significant portion of the historic_business_assets of corporation in a business j8 at the time of the transaction holding_company will not have outstanding any warrants options convertible securities or any other type of right pursuant to which any person could acquire stock in holding_company that if exercised or converted would affect the corporation shareholders’ acquisition or retention of control of holding_company as defined in sec_368 of the code k8 holding_company corporation and the shareholders of corporation will pay their respective expenses if any incurred in connection with the transaction l8 there is no intercorporate indebtedness existing between holding_company and corporation that was issued acquired or will be settled at a discount m8 no two parties to the transaction are investment companies as defined in sec_368 and iv of the code n8 the fair_market_value of the assets of corporation transferred to holding_company will equal or exceed the sum of the liabilities transferred to holding_company plus the amount of liabilities if any to which the transferred assets are subject o8 the total adjusted_basis of the assets of corporation transferred to holding_company will equal or exceed the sum of the liabilities to be transferred to holding_company plus the amount of liabilities if any to which the transferred assets are subject p8 corporation is not under the jurisdiction of a court in a title_11_or_similar_case within the meaning of sec_368 of the code the parties have submitted the following representations with respect to the portion of the proposed transaction involving corporation the corporation proposed transaction a9 the fair_market_value of the holding_company stock received by each corporation shareholder will be approximately equal to the fair_market_value of the corporation stock deemed surrendered in the exchange plr-107595-02 b9 there is no plan or intention by the shareholders of corporation who own one percent or more of the corporation stock and to the best of the knowledge of the management of corporation there is no plan or intention on the part of the remaining shareholders of corporation to sell exchange or otherwise dispose_of a number of shares of holding_company stock received in the transaction that would reduce the corporation shareholders’ ownership of holding_company stock to a number of shares having a value as of the date of the transaction of less than percent of the value of all of the formerly outstanding_stock of corporation as of the same date for purposes of this representation shares of corporation stock exchanged for cash or other_property or exchanged for cash in lieu of fractional shares of holding_company stock will be treated as outstanding corporation stock on the date of the transaction moreover shares of corporation stock and shares of holding_company stock held by corporation shareholders and otherwise sold redeemed or disposed of prior or subsequent to the transaction will be considered in making this representation c9 holding_company will acquire at least percent of the fair_market_value of the net assets and at least percent of the fair_market_value of the gross assets held by corporation immediately prior to the transaction for purposes of this representation amounts used by corporation to pay its reorganization expenses all redemptions and any distributions except for regular normal dividends made by corporation immediately preceding the transfer will be included as assets of corporation held immediately prior to the transaction d9 after the transaction the shareholders of corporation will be in control of holding_company within the meaning of sec_368 of the code e9 holding_company has no plan or intention to reacquire any of its stock issued in the transaction f9 holding_company has no plan or intention to sell or otherwise dispose_of any of the assets of corporation acquired in the transaction except for dispositions made in the ordinary course of business g9 the liabilities of corporation transferred to holding_company plus the liabilities if any to which the transferred assets are subject were incurred by corporation in the ordinary course of its business and are associated with the assets transferred h9 following the transaction holding_company will continue the historic_business of corporation or use a significant portion of the historic plr-107595-02 business_assets of corporation in a business j9 at the time of the transaction holding_company will not have outstanding any warrants options convertible securities or any other type of right pursuant to which any person could acquire stock in holding_company that if exercised or converted would affect the corporation shareholders’ acquisition or retention of control of holding_company as defined in sec_368 of the code k9 holding_company corporation and the shareholders of corporation will pay their respective expenses if any incurred in connection with the transaction l9 there is no intercorporate indebtedness existing between holding_company and corporation that was issued acquired or will be settled at a discount m9 no two parties to the transaction are investment companies as defined in sec_368 and iv of the code n9 the fair_market_value of the assets of corporation transferred to holding_company will equal or exceed the sum of the liabilities transferred to holding_company plus the amount of liabilities if any to which the transferred assets are subject o9 the total adjusted_basis of the assets of corporation transferred to holding_company will equal or exceed the sum of the liabilities to be transferred to holding_company plus the amount of liabilities if any to which the transferred assets are subject p9 corporation is not under the jurisdiction of a court in a title_11_or_similar_case within the meaning of sec_368 of the code the parties have submitted the following representations with respect to the portion of the proposed transaction involving corporation the corporation proposed transaction a10 the fair_market_value of the holding_company stock received by each corporation shareholder will be approximately equal to the fair_market_value of the corporation stock deemed surrendered in the exchange b10 there is no plan or intention by the shareholders of corporation who own one percent or more of the corporation stock and to the best of the knowledge of the management of corporation there is no plan or plr-107595-02 intention on the part of the remaining shareholders of corporation to sell exchange or otherwise dispose_of a number of shares of holding_company stock received in the transaction that would reduce the corporation shareholders’ ownership of holding_company stock to a number of shares having a value as of the date of the transaction of less than percent of the value of all of the formerly outstanding_stock of corporation as of the same date for purposes of this representation shares of corporation stock exchanged for cash or other_property or exchanged for cash in lieu of fractional shares of holding_company stock will be treated as outstanding corporation stock on the date of the transaction moreover shares of corporation stock and shares of holding_company stock held by corporation shareholders and otherwise sold redeemed or disposed of prior or subsequent to the transaction will be considered in making this representation c10 holding_company will acquire at least percent of the fair_market_value of the net assets and at least percent of the fair_market_value of the gross assets held by corporation immediately prior to the transaction for purposes of this representation amounts used by corporation to pay its reorganization expenses all redemptions and any distributions except for regular normal dividends made by corporation immediately preceding the transfer will be included as assets of corporation held immediately prior to the transaction d10 after the transaction the shareholders of corporation will be in control of holding_company within the meaning of sec_368 of the code e10 holding_company has no plan or intention to reacquire any of its stock issued in the transaction f10 holding_company has no plan or intention to sell or otherwise dispose_of any of the assets of corporation acquired in the transaction except for dispositions made in the ordinary course of business g10 the liabilities of corporation transferred to holding_company plus the liabilities if any to which the transferred assets are subject were incurred by corporation in the ordinary course of its business and are associated with the assets transferred h10 following the transaction holding_company will continue the historic_business of corporation or use a significant portion of the historic_business_assets of corporation in a business j10 at the time of the transaction holding_company will not have outstanding plr-107595-02 any warrants options convertible securities or any other type of right pursuant to which any person could acquire stock in holding_company that if exercised or converted would affect the corporation shareholders’ acquisition or retention of control of holding_company as defined in sec_368 of the code k10 holding_company corporation and the shareholders of corporation will pay their respective expenses if any incurred in connection with the transaction l10 there is no intercorporate indebtedness existing between holding_company and corporation that was issued acquired or will be settled at a discount m10 no two parties to the transaction are investment companies as defined in sec_368 and iv of the code n10 the fair_market_value of the assets of corporation transferred to holding_company will equal or exceed the sum of the liabilities transferred to holding_company plus the amount of liabilities if any to which the transferred assets are subject o10 the total adjusted_basis of the assets of corporation transferred to holding_company will equal or exceed the sum of the liabilities to be transferred to holding_company plus the amount of liabilities if any to which the transferred assets are subject p10 corporation is not under the jurisdiction of a court in a title_11_or_similar_case within the meaning of sec_368 of the code the parties have submitted the following representations with respect to the portion of the proposed transaction involving corporation the corporation proposed transaction a11 the fair_market_value of the holding_company stock received by each corporation shareholder will be approximately equal to the fair_market_value of the corporation stock deemed surrendered in the exchange b11 there is no plan or intention by the shareholders of corporation who own one percent or more of the corporation stock and to the best of the knowledge of the management of corporation there is no plan or intention on the part of the remaining shareholders of corporation to sell exchange or otherwise dispose_of a number of shares of holding_company stock received in the transaction that would reduce the plr-107595-02 corporation shareholders’ ownership of holding_company stock to a number of shares having a value as of the date of the transaction of less than percent of the value of all of the formerly outstanding_stock of corporation as of the same date for purposes of this representation shares of corporation stock exchanged for cash or other_property or exchanged for cash in lieu of fractional shares of holding_company stock will be treated as outstanding corporation stock on the date of the transaction moreover shares of corporation stock and shares of holding_company stock held by corporation shareholders and otherwise sold redeemed or disposed of prior or subsequent to the transaction will be considered in making this representation c11 holding_company will acquire at least percent of the fair_market_value of the net assets and at least percent of the fair_market_value of the gross assets held by corporation immediately prior to the transaction for purposes of this representation amounts used by corporation to pay its reorganization expenses all redemptions and any distributions except for regular normal dividends made by corporation immediately preceding the transfer will be included as assets of corporation held immediately prior to the transaction d11 after the transaction the shareholders of corporation will be in control of holding_company within the meaning of sec_368 of the code e11 holding_company has no plan or intention to reacquire any of its stock issued in the transaction f11 holding_company has no plan or intention to sell or otherwise dispose_of any of the assets of corporation acquired in the transaction except for dispositions made in the ordinary course of business g11 the liabilities of corporation transferred to holding_company plus the liabilities if any to which the transferred assets are subject were incurred by corporation in the ordinary course of its business and are associated with the assets transferred h11 following the transaction holding_company will continue the historic_business of corporation or use a significant portion of the historic_business_assets of corporation in a business j11 at the time of the transaction holding_company will not have outstanding any warrants options convertible securities or any other type of right pursuant to which any person could acquire stock in holding_company that if exercised or converted would affect the corporation plr-107595-02 shareholders’ acquisition or retention of control of holding_company as defined in sec_368 of the code k11 holding_company corporation and the shareholders of corporation will pay their respective expenses if any incurred in connection with the transaction l11 there is no intercorporate indebtedness existing between holding_company and corporation that was issued acquired or will be settled at a discount m11 no two parties to the transaction are investment companies as defined in sec_368 and iv of the code n11 the fair_market_value of the assets of corporation transferred to holding_company will equal or exceed the sum of the liabilities transferred to holding_company plus the amount of liabilities if any to which the transferred assets are subject o11 the total adjusted_basis of the assets of corporation transferred to holding_company will equal or exceed the sum of the liabilities to be transferred to holding_company plus the amount of liabilities if any to which the transferred assets are subject p11 corporation is not under the jurisdiction of a court in a title_11_or_similar_case within the meaning of sec_368 of the code based solely on the information submitted and on the representations set forth above we hold as follows with respect to the corporation proposed transaction for federal_income_tax purposes the contribution and liquidation will be treated as the transfer by corporation of substantially_all of its assets to holding_company in exchange for holding_company stock and the transfer to holding_company of all of the liabilities of corporation followed by the liquidation of corporation the contribution and liquidation will constitute a reorganization within the meaning of sec_368 of the code for purposes of this ruling substantially_all means at least percent of the fair_market_value of the net assets and at least percent of the fair_market_value of the gross assets of corporation holding_company and corporation will each be a_party_to_a_reorganization within the meaning of sec_368 of the code plr-107595-02 no gain_or_loss will be recognized to corporation on the transfer of substantially_all of its assets to holding_company in exchange for holding_company voting_stock sec_361 and sec_357 of the code no gain_or_loss will be recognized to holding_company upon the receipt of substantially_all of the assets of corporation in exchange for holding_company voting_stock sec_1032 of the code no gain_or_loss will be recognized to the corporation shareholders by reason of the exchange of their shares of corporation stock solely for shares of holding_company voting_stock sec_354 of the code no gain_or_loss will be recognized to corporation upon the distribution of holding_company voting_stock to the corporation shareholders sec_361 of the code the basis of the corporation assets in the hands of holding_company will be the same as the basis of those assets in the hands of corporation immediately prior to the transfer sec_362 of the code the holding_period of the corporation assets in the hands of holding_company will include the period during which such assets were held by corporation sec_1223 of the code the basis of the shares of holding_company voting_stock received by the corporation shareholders will be the same in each instance as their basis in the corporation stock surrendered in exchange therefor sec_358 of the code the holding_period of the holding_company voting_stock received by the corporation shareholders will include the holding_period of the corporation stock surrendered in exchange therefor provided that such corporation stock is held as a capital_asset on the date of the exchange sec_1223 of the code the taxable_year of corporation will end at the close of the day before the qsub election becomes effective on the date of the transfer of its assets to holding_company sec_381 of the code and sec_1_381_b_-1 and sec_1_1361-4 of the regulations pursuant to sec_381 of the code and sec_1_381_a_-1 of the plr-107595-02 regulations holding_company will succeed to and take into account as of the date of the proposed transfer as defined in sec_1_381_b_-1 of the regulations the items of corporation described in sec_381 of the code subject_to the conditions and limitations specified in sec_381 sec_382 sec_383 and sec_384 of the code and the regulations thereunder as provided by sec_381 of the code and sec_1_381_c_2_-1 of the regulations holding_company will succeed to and take into account the earnings_and_profits or deficit in earnings_and_profits of corporation as of the date of transfer any deficit in the earnings or profits of either corporation or holding_company will be used only to offset the earnings_and_profits accumulated after the date of transfer sec_381 of the code sec_1374 will not subject the assets that are transferred from corporation to holding_company to the built-in_gain provisions of sec_1374 but to the extent that assets are presently subject_to the built-in_gain provisions of sec_1374 they will continue to be subject_to the built-in_gain provisions of sec_1374 on the same basis as they were subject_to such provisions in corporation based solely on the information submitted and on the representations set forth above we hold as follows with respect to the corporation proposed transaction for federal_income_tax purposes the contribution and liquidation will be treated as the transfer by corporation of substantially_all of its assets to holding_company in exchange for holding_company stock and the transfer to holding_company of all of the liabilities of corporation followed by the liquidation of corporation the contribution and liquidation will constitute a reorganization within the meaning of sec_368 of the code for purposes of this ruling substantially_all means at least percent of the fair_market_value of the net assets and at least percent of the fair_market_value of the gross assets of corporation holding_company and corporation will each be a_party_to_a_reorganization within the meaning of sec_368 of the code no gain_or_loss will be recognized to corporation on the transfer of substantially_all of its assets to holding_company in exchange for holding_company voting_stock sec_361 and sec_357 of the code plr-107595-02 no gain_or_loss will be recognized to holding_company upon the receipt of substantially_all of the assets of corporation in exchange for holding_company voting_stock sec_1032 of the code no gain_or_loss will be recognized to the corporation shareholders by reason of the exchange of their shares of corporation stock solely for shares of holding_company voting_stock sec_354 of the code no gain_or_loss will be recognized to corporation upon the distribution of holding_company voting_stock to the corporation shareholders sec_361 of the code the basis of the corporation assets in the hands of holding_company will be the same as the basis of those assets in the hands of corporation immediately prior to the transfer sec_362 of the code the holding_period of the corporation assets in the hands of holding_company will include the period during which such assets were held by corporation sec_1223 of the code the basis of the shares of holding_company voting_stock received by the corporation shareholders will be the same in each instance as their basis in the corporation stock surrendered in exchange therefor sec_358 of the code the holding_period of the holding_company voting_stock received by the corporation shareholders will include the holding_period of the corporation stock surrendered in exchange therefor provided that such corporation stock is held as a capital_asset on the date of the exchange sec_1223 of the code the taxable_year of corporation will end at the close of the day before the qsub election becomes effective on the date of the transfer of its assets to holding_company sec_381 of the code and sec_1_381_b_-1 and sec_1_1361-4 of the regulations pursuant to sec_381 of the code and sec_1_381_a_-1 of the regulations holding_company will succeed to and take into account as of the date of the proposed transfer as defined in sec_1_381_b_-1 of the regulations the items of corporation described in sec_381 of the code subject_to the conditions and limitations specified in sec_381 sec_382 sec_383 and sec_384 of the code and plr-107595-02 the regulations thereunder as provided by sec_381 of the code and sec_1_381_c_2_-1 of the regulations holding_company will succeed to and take into account the earnings_and_profits or deficit in earnings_and_profits of corporation as of the date of transfer any deficit in the earnings or profits of either corporation or holding_company will be used only to offset the earnings_and_profits accumulated after the date of transfer sec_381 of the code sec_1374 will not subject the assets that are transferred from corporation to holding_company to the built-in_gain provisions of sec_1374 but to the extent that assets are presently subject_to the built-in_gain provisions of sec_1374 they will continue to be subject_to the built-in_gain provisions of sec_1374 on the same basis as they were subject_to such provisions in corporation based solely on the information submitted and on the representations set forth above we hold as follows with respect to the corporation proposed transaction for federal_income_tax purposes the contribution and liquidation will be treated as the transfer by corporation of substantially_all of its assets to holding_company in exchange for holding_company stock and the transfer to holding_company of all of the liabilities of corporation followed by the liquidation of corporation the contribution and liquidation will constitute a reorganization within the meaning of sec_368 of the code for purposes of this ruling substantially_all means at least percent of the fair_market_value of the net assets and at least percent of the fair_market_value of the gross assets of corporation holding_company and corporation will each be a_party_to_a_reorganization within the meaning of sec_368 of the code no gain_or_loss will be recognized to corporation on the transfer of substantially_all of its assets to holding_company in exchange for holding_company voting_stock sec_361 and sec_357 of the code no gain_or_loss will be recognized to holding_company upon the receipt of substantially_all of the assets of corporation in exchange for holding_company voting_stock sec_1032 of the code plr-107595-02 no gain_or_loss will be recognized to the corporation shareholders by reason of the exchange of their shares of corporation stock solely for shares of holding_company voting_stock sec_354 of the code no gain_or_loss will be recognized to corporation upon the distribution of holding_company voting_stock to the corporation shareholders sec_361 of the code the basis of the corporation assets in the hands of holding_company will be the same as the basis of those assets in the hands of corporation immediately prior to the transfer sec_362 of the code the holding_period of the corporation assets in the hands of holding_company will include the period during which such assets were held by corporation sec_1223 of the code the basis of the shares of holding_company voting_stock received by the corporation shareholders will be the same in each instance as their basis in the corporation stock surrendered in exchange therefor sec_358 of the code the holding_period of the holding_company voting_stock received by the corporation shareholders will include the holding_period of the corporation stock surrendered in exchange therefor provided that such corporation stock is held as a capital_asset on the date of the exchange sec_1223 of the code the taxable_year of corporation will end at the close of the day before the qsub election becomes effective on the date of the transfer of its assets to holding_company sec_381 of the code and sec_1_381_b_-1 and sec_1_1361-4 of the regulations pursuant to sec_381 of the code and sec_1_381_a_-1 of the regulations holding_company will succeed to and take into account as of the date of the proposed transfer as defined in sec_1_381_b_-1 of the regulations the items of corporation described in sec_381 of the code subject_to the conditions and limitations specified in sec_381 sec_382 sec_383 and sec_384 of the code and the regulations thereunder as provided by sec_381 of the code and sec_1_381_c_2_-1 of the regulations holding_company will succeed to and take into account the earnings_and_profits or deficit in earnings_and_profits plr-107595-02 of corporation as of the date of transfer any deficit in the earnings or profits of either corporation or holding_company will be used only to offset the earnings_and_profits accumulated after the date of transfer sec_381 of the code sec_1374 will not subject the assets that are transferred from corporation to holding_company to the built-in_gain provisions of sec_1374 but to the extent that assets are presently subject_to the built-in_gain provisions of sec_1374 they will continue to be subject_to the built-in_gain provisions of sec_1374 on the same basis as they were subject_to such provisions in corporation based solely on the information submitted and on the representations set forth above we hold as follows with respect to the corporation proposed transaction for federal_income_tax purposes the contribution and liquidation will be treated as the transfer by corporation of substantially_all of its assets to holding_company in exchange for holding_company stock and the transfer to holding_company of all of the liabilities of corporation followed by the liquidation of corporation the contribution and liquidation will constitute a reorganization within the meaning of sec_368 of the code for purposes of this ruling substantially_all means at least percent of the fair_market_value of the net assets and at least percent of the fair_market_value of the gross assets of corporation holding_company and corporation will each be a_party_to_a_reorganization within the meaning of sec_368 of the code no gain_or_loss will be recognized to corporation on the transfer of substantially_all of its assets to holding_company in exchange for holding_company voting_stock sec_361 and sec_357 of the code no gain_or_loss will be recognized to holding_company upon the receipt of substantially_all of the assets of corporation in exchange for holding_company voting_stock sec_1032 of the code no gain_or_loss will be recognized to the corporation shareholders by reason of the exchange of their shares of corporation stock solely for shares of holding_company voting_stock sec_354 of the code plr-107595-02 no gain_or_loss will be recognized to corporation upon the distribution of holding_company voting_stock to the corporation shareholders sec_361 of the code the basis of the corporation assets in the hands of holding_company will be the same as the basis of those assets in the hands of corporation immediately prior to the transfer sec_362 of the code the holding_period of the corporation assets in the hands of holding_company will include the period during which such assets were held by corporation sec_1223 of the code the basis of the shares of holding_company voting_stock received by the corporation shareholders will be the same in each instance as their basis in the corporation stock surrendered in exchange therefor sec_358 of the code the holding_period of the holding_company voting_stock received by the corporation shareholders will include the holding_period of the corporation stock surrendered in exchange therefor provided that such corporation stock is held as a capital_asset on the date of the exchange sec_1223 of the code the taxable_year of corporation will end at the close of the day before the qsub election becomes effective on the date of the transfer of its assets to holding_company sec_381 of the code and sec_1_381_b_-1 and sec_1_1361-4 of the regulations pursuant to sec_381 of the code and sec_1_381_a_-1 of the regulations holding_company will succeed to and take into account as of the date of the proposed transfer as defined in sec_1_381_b_-1 of the regulations the items of corporation described in sec_381 of the code subject_to the conditions and limitations specified in sec_381 sec_382 sec_383 and sec_384 of the code and the regulations thereunder as provided by sec_381 of the code and sec_1_381_c_2_-1 of the regulations holding_company will succeed to and take into account the earnings_and_profits or deficit in earnings_and_profits of corporation as of the date of transfer any deficit in the earnings or profits of either corporation or holding_company will be used only to offset the earnings_and_profits accumulated after the date of transfer sec_381 of the code plr-107595-02 sec_1374 will not subject the assets that are transferred from corporation to holding_company to the built-in_gain provisions of sec_1374 but to the extent that assets are presently subject_to the built-in_gain provisions of sec_1374 they will continue to be subject_to the built-in_gain provisions of sec_1374 on the same basis as they were subject_to such provisions in corporation based solely on the information submitted and on the representations set forth above we hold as follows with respect to the corporation proposed transaction for federal_income_tax purposes the contribution and liquidation will be treated as the transfer by corporation of substantially_all of its assets to holding_company in exchange for holding_company stock and the transfer to holding_company of all of the liabilities of corporation followed by the liquidation of corporation the contribution and liquidation will constitute a reorganization within the meaning of sec_368 of the code for purposes of this ruling substantially_all means at least percent of the fair_market_value of the net assets and at least percent of the fair_market_value of the gross assets of corporation holding_company and corporation will each be a_party_to_a_reorganization within the meaning of sec_368 of the code no gain_or_loss will be recognized to corporation on the transfer of substantially_all of its assets to holding_company in exchange for holding_company voting_stock sec_361 and sec_357 of the code no gain_or_loss will be recognized to holding_company upon the receipt of substantially_all of the assets of corporation in exchange for holding_company voting_stock sec_1032 of the code no gain_or_loss will be recognized to the corporation shareholders by reason of the exchange of their shares of corporation stock solely for shares of holding_company voting_stock sec_354 of the code no gain_or_loss will be recognized to corporation upon the distribution of holding_company voting_stock to the corporation shareholders sec_361 of the code the basis of the corporation assets in the hands of holding plr-107595-02 company will be the same as the basis of those assets in the hands of corporation immediately prior to the transfer sec_362 of the code the holding_period of the corporation assets in the hands of holding_company will include the period during which such assets were held by corporation sec_1223 of the code the basis of the shares of holding_company voting_stock received by the corporation shareholders will be the same in each instance as their basis in the corporation stock surrendered in exchange therefor sec_358 of the code the holding_period of the holding_company voting_stock received by the corporation shareholders will include the holding_period of the corporation stock surrendered in exchange therefor provided that such corporation stock is held as a capital_asset on the date of the exchange sec_1223 of the code the taxable_year of corporation will end at the close of the day before the qsub election becomes effective on the date of the transfer of its assets to holding_company sec_381 of the code and sec_1_381_b_-1 and sec_1_1361-4 of the regulations pursuant to sec_381 of the code and sec_1_381_a_-1 of the regulations holding_company will succeed to and take into account as of the date of the proposed transfer as defined in sec_1_381_b_-1 of the regulations the items of corporation described in sec_381 of the code subject_to the conditions and limitations specified in sec_381 sec_382 sec_383 and sec_384 of the code and the regulations thereunder as provided by sec_381 of the code and sec_1_381_c_2_-1 of the regulations holding_company will succeed to and take into account the earnings_and_profits or deficit in earnings_and_profits of corporation as of the date of transfer any deficit in the earnings or profits of either corporation or holding_company will be used only to offset the earnings_and_profits accumulated after the date of transfer sec_381 of the code sec_1374 will not subject the assets that are transferred from corporation to holding_company to the built-in_gain provisions of sec_1374 but to the extent that assets are presently subject_to the built-in_gain provisions of sec_1374 they will continue to be subject_to the built-in_gain provisions of sec_1374 on the same basis as they were subject_to such plr-107595-02 provisions in corporation based solely on the information submitted and on the representations set forth above we hold as follows with respect to the corporation proposed transaction for federal_income_tax purposes the contribution and liquidation will be treated as the transfer by corporation of substantially_all of its assets to holding_company in exchange for holding_company stock and the transfer to holding_company of all of the liabilities of corporation followed by the liquidation of corporation the contribution and liquidation will constitute a reorganization within the meaning of sec_368 of the code for purposes of this ruling substantially_all means at least percent of the fair_market_value of the net assets and at least percent of the fair_market_value of the gross assets of corporation holding_company and corporation will each be a_party_to_a_reorganization within the meaning of sec_368 of the code no gain_or_loss will be recognized to corporation on the transfer of substantially_all of its assets to holding_company in exchange for holding_company voting_stock sec_361 and sec_357 of the code no gain_or_loss will be recognized to holding_company upon the receipt of substantially_all of the assets of corporation in exchange for holding_company voting_stock sec_1032 of the code no gain_or_loss will be recognized to the corporation shareholders by reason of the exchange of their shares of corporation stock solely for shares of holding_company voting_stock sec_354 of the code no gain_or_loss will be recognized to corporation upon the distribution of holding_company voting_stock to the corporation shareholders sec_361 of the code the basis of the corporation assets in the hands of holding_company will be the same as the basis of those assets in the hands of corporation immediately prior to the transfer sec_362 of the code the holding_period of the corporation assets in the hands of plr-107595-02 holding_company will include the period during which such assets were held by corporation sec_1223 of the code the basis of the shares of holding_company voting_stock received by the corporation shareholders will be the same in each instance as their basis in the corporation stock surrendered in exchange therefor sec_358 of the code the holding_period of the holding_company voting_stock received by the corporation shareholders will include the holding_period of the corporation stock surrendered in exchange therefor provided that such corporation stock is held as a capital_asset on the date of the exchange sec_1223 of the code the taxable_year of corporation will end at the close of the day before the qsub election becomes effective on the date of the transfer of its assets to holding_company sec_381 of the code and sec_1_381_b_-1 and sec_1_1361-4 of the regulations pursuant to sec_381 of the code and sec_1_381_a_-1 of the regulations holding_company will succeed to and take into account as of the date of the proposed transfer as defined in sec_1_381_b_-1 of the regulations the items of corporation described in sec_381 of the code subject_to the conditions and limitations specified in sec_381 sec_382 sec_383 and sec_384 of the code and the regulations thereunder as provided by sec_381 of the code and sec_1_381_c_2_-1 of the regulations holding_company will succeed to and take into account the earnings_and_profits or deficit in earnings_and_profits of corporation as of the date of transfer any deficit in the earnings or profits of either corporation or holding_company will be used only to offset the earnings_and_profits accumulated after the date of transfer sec_381 of the code sec_1374 will not subject the assets that are transferred from corporation to holding_company to the built-in_gain provisions of sec_1374 but to the extent that assets are presently subject_to the built-in_gain provisions of sec_1374 they will continue to be subject_to the built-in_gain provisions of sec_1374 on the same basis as they were subject_to such provisions in corporation based solely on the information submitted and on the representations set forth above we hold as follows with respect to the corporation proposed transaction plr-107595-02 for federal_income_tax purposes the contribution and liquidation will be treated as the transfer by corporation of substantially_all of its assets to holding_company in exchange for holding_company stock and the transfer to holding_company of all of the liabilities of corporation followed by the liquidation of corporation the contribution and liquidation will constitute a reorganization within the meaning of sec_368 of the code for purposes of this ruling substantially_all means at least percent of the fair_market_value of the net assets and at least percent of the fair_market_value of the gross assets of corporation holding_company and corporation will each be a_party_to_a_reorganization within the meaning of sec_368 of the code no gain_or_loss will be recognized to corporation on the transfer of substantially_all of its assets to holding_company in exchange for holding_company voting_stock sec_361 and sec_357 of the code no gain_or_loss will be recognized to holding_company upon the receipt of substantially_all of the assets of corporation in exchange for holding_company voting_stock sec_1032 of the code no gain_or_loss will be recognized to the corporation shareholders by reason of the exchange of their shares of corporation stock solely for shares of holding_company voting_stock sec_354 of the code no gain_or_loss will be recognized to corporation upon the distribution of holding_company voting_stock to the corporation shareholders sec_361 of the code the basis of the corporation assets in the hands of holding_company will be the same as the basis of those assets in the hands of corporation immediately prior to the transfer sec_362 of the code the holding_period of the corporation assets in the hands of holding_company will include the period during which such assets were held by corporation sec_1223 of the code the basis of the shares of holding_company voting_stock received by the corporation shareholders will be the same in each plr-107595-02 instance as their basis in the corporation stock surrendered in exchange therefor sec_358 of the code the holding_period of the holding_company voting_stock received by the corporation shareholders will include the holding_period of the corporation stock surrendered in exchange therefor provided that such corporation stock is held as a capital_asset on the date of the exchange sec_1223 of the code the taxable_year of corporation will end at the close of the day before the qsub election becomes effective on the date of the transfer of its assets to holding_company sec_381 of the code and sec_1_381_b_-1 and sec_1_1361-4 of the regulations pursuant to sec_381 of the code and sec_1_381_a_-1 of the regulations holding_company will succeed to and take into account as of the date of the proposed transfer as defined in sec_1_381_b_-1 of the regulations the items of corporation described in sec_381 of the code subject_to the conditions and limitations specified in sec_381 sec_382 sec_383 and sec_384 of the code and the regulations thereunder as provided by sec_381 of the code and sec_1_381_c_2_-1 of the regulations holding_company will succeed to and take into account the earnings_and_profits or deficit in earnings_and_profits of corporation as of the date of transfer any deficit in the earnings or profits of either corporation or holding_company will be used only to offset the earnings_and_profits accumulated after the date of transfer sec_381 of the code sec_1374 will not subject the assets that are transferred from corporation to holding_company to the built-in_gain provisions of sec_1374 but to the extent that assets are presently subject_to the built-in_gain provisions of sec_1374 they will continue to be subject_to the built-in_gain provisions of sec_1374 on the same basis as they were subject_to such provisions in corporation based solely on the information submitted and on the representations set forth above we hold as follows with respect to the corporation proposed transaction for federal_income_tax purposes the contribution and liquidation will be treated as the transfer by corporation of substantially_all of its assets to holding_company in exchange for holding_company stock and the transfer to holding_company of all of the liabilities of corporation followed by the liquidation of corporation plr-107595-02 the contribution and liquidation will constitute a reorganization within the meaning of sec_368 of the code for purposes of this ruling substantially_all means at least percent of the fair_market_value of the net assets and at least percent of the fair_market_value of the gross assets of corporation holding_company and corporation will each be a_party_to_a_reorganization within the meaning of sec_368 of the code no gain_or_loss will be recognized to corporation on the transfer of substantially_all of its assets to holding_company in exchange for holding_company voting_stock sec_361 and sec_357 of the code no gain_or_loss will be recognized to holding_company upon the receipt of substantially_all of the assets of corporation in exchange for holding_company voting_stock sec_1032 of the code no gain_or_loss will be recognized to the corporation shareholders by reason of the exchange of their shares of corporation stock solely for shares of holding_company voting_stock sec_354 of the code no gain_or_loss will be recognized to corporation upon the distribution of holding_company voting_stock to the corporation shareholders sec_361 of the code the basis of the corporation assets in the hands of holding_company will be the same as the basis of those assets in the hands of corporation immediately prior to the transfer sec_362 of the code the holding_period of the corporation assets in the hands of holding_company will include the period during which such assets were held by corporation sec_1223 of the code the basis of the shares of holding_company voting_stock received by the corporation shareholders will be the same in each instance as their basis in the corporation stock surrendered in exchange therefor sec_358 of the code the holding_period of the holding_company voting_stock received by the corporation shareholders will include the holding_period of the plr-107595-02 corporation stock surrendered in exchange therefor provided that such corporation stock is held as a capital_asset on the date of the exchange sec_1223 of the code the taxable_year of corporation will end at the close of the day before the qsub election becomes effective on the date of the transfer of its assets to holding_company sec_381 of the code and sec_1_381_b_-1 and sec_1_1361-4 of the regulations pursuant to sec_381 of the code and sec_1_381_a_-1 of the regulations holding_company will succeed to and take into account as of the date of the proposed transfer as defined in sec_1_381_b_-1 of the regulations the items of corporation described in sec_381 of the code subject_to the conditions and limitations specified in sec_381 sec_382 sec_383 and sec_384 of the code and the regulations thereunder as provided by sec_381 of the code and sec_1_381_c_2_-1 of the regulations holding_company will succeed to and take into account the earnings_and_profits or deficit in earnings_and_profits of corporation as of the date of transfer any deficit in the earnings or profits of either corporation or holding_company will be used only to offset the earnings_and_profits accumulated after the date of transfer sec_381 of the code sec_1374 will not subject the assets that are transferred from corporation to holding_company to the built-in_gain provisions of sec_1374 but to the extent that assets are presently subject_to the built-in_gain provisions of sec_1374 they will continue to be subject_to the built-in_gain provisions of sec_1374 on the same basis as they were subject_to such provisions in corporation based solely on the information submitted and on the representations set forth above we hold as follows with respect to the corporation proposed transaction for federal_income_tax purposes the contribution and liquidation will be treated as the transfer by corporation of substantially_all of its assets to holding_company in exchange for holding_company stock and the transfer to holding_company of all of the liabilities of corporation followed by the liquidation of corporation the contribution and liquidation will constitute a reorganization within the meaning of sec_368 of the code for purposes of this ruling substantially_all means at least percent of the fair_market_value of the net assets and at least percent of the fair plr-107595-02 market_value of the gross assets of corporation holding_company and corporation will each be a_party_to_a_reorganization within the meaning of sec_368 of the code no gain_or_loss will be recognized to corporation on the transfer of substantially_all of its assets to holding_company in exchange for holding_company voting_stock sec_361 and sec_357 of the code no gain_or_loss will be recognized to holding_company upon the receipt of substantially_all of the assets of corporation in exchange for holding_company voting_stock sec_1032 of the code no gain_or_loss will be recognized to the corporation shareholders by reason of the exchange of their shares of corporation stock solely for shares of holding_company voting_stock sec_354 of the code no gain_or_loss will be recognized to corporation upon the distribution of holding_company voting_stock to the corporation shareholders sec_361 of the code the basis of the corporation assets in the hands of holding_company will be the same as the basis of those assets in the hands of corporation immediately prior to the transfer sec_362 of the code the holding_period of the corporation assets in the hands of holding_company will include the period during which such assets were held by corporation sec_1223 of the code the basis of the shares of holding_company voting_stock received by the corporation shareholders will be the same in each instance as their basis in the corporation stock surrendered in exchange therefor sec_358 of the code the holding_period of the holding_company voting_stock received by the corporation shareholders will include the holding_period of the corporation stock surrendered in exchange therefor provided that such corporation stock is held as a capital_asset on the date of the exchange sec_1223 of the code the taxable_year of corporation will end at the close of the day plr-107595-02 before the qsub election becomes effective on the date of the transfer of its assets to holding_company sec_381 of the code and sec_1_381_b_-1 and sec_1_1361-4 of the regulations pursuant to sec_381 of the code and sec_1_381_a_-1 of the regulations holding_company will succeed to and take into account as of the date of the proposed transfer as defined in sec_1_381_b_-1 of the regulations the items of corporation described in sec_381 of the code subject_to the conditions and limitations specified in sec_381 sec_382 sec_383 and sec_384 of the code and the regulations thereunder as provided by sec_381 of the code and sec_1_381_c_2_-1 of the regulations holding_company will succeed to and take into account the earnings_and_profits or deficit in earnings_and_profits of corporation as of the date of transfer any deficit in the earnings or profits of either corporation or holding_company will be used only to offset the earnings_and_profits accumulated after the date of transfer sec_381 of the code sec_1374 will not subject the assets that are transferred from corporation to holding_company to the built-in_gain provisions of sec_1374 but to the extent that assets are presently subject_to the built-in_gain provisions of sec_1374 they will continue to be subject_to the built-in_gain provisions of sec_1374 on the same basis as they were subject_to such provisions in corporation based solely on the information submitted and on the representations set forth above we hold as follows with respect to the corporation proposed transaction for federal_income_tax purposes the contribution and liquidation will be treated as the transfer by corporation of substantially_all of its assets to holding_company in exchange for holding_company stock and the transfer to holding_company of all of the liabilities of corporation followed by the liquidation of corporation the contribution and liquidation will constitute a reorganization within the meaning of sec_368 of the code for purposes of this ruling substantially_all means at least percent of the fair_market_value of the net assets and at least percent of the fair_market_value of the gross assets of corporation holding_company and corporation will each be a_party_to_a_reorganization within the meaning of sec_368 of the code plr-107595-02 no gain_or_loss will be recognized to corporation on the transfer of substantially_all of its assets to holding_company in exchange for holding_company voting_stock sec_361 and sec_357 of the code no gain_or_loss will be recognized to holding_company upon the receipt of substantially_all of the assets of corporation in exchange for holding_company voting_stock sec_1032 of the code no gain_or_loss will be recognized to the corporation shareholders by reason of the exchange of their shares of corporation stock solely for shares of holding_company voting_stock sec_354 of the code no gain_or_loss will be recognized to corporation upon the distribution of holding_company voting_stock to the corporation shareholders sec_361 of the code the basis of the corporation assets in the hands of holding_company will be the same as the basis of those assets in the hands of corporation immediately prior to the transfer sec_362 of the code the holding_period of the corporation assets in the hands of holding_company will include the period during which such assets were held by corporation sec_1223 of the code the basis of the shares of holding_company voting_stock received by the corporation shareholders will be the same in each instance as their basis in the corporation stock surrendered in exchange therefor sec_358 of the code the holding_period of the holding_company voting_stock received by the corporation shareholders will include the holding_period of the corporation stock surrendered in exchange therefor provided that such corporation stock is held as a capital_asset on the date of the exchange sec_1223 of the code the taxable_year of corporation will end at the close of the day before the qsub election becomes effective on the date of the transfer of its assets to holding_company sec_381 of the code and sec_1_381_b_-1 and sec_1_1361-4 of the regulations pursuant to sec_381 of the code and sec_1_381_a_-1 of the plr-107595-02 regulations holding_company will succeed to and take into account as of the date of the proposed transfer as defined in sec_1_381_b_-1 of the regulations the items of corporation described in sec_381 of the code subject_to the conditions and limitations specified in sec_381 sec_382 sec_383 and sec_384 of the code and the regulations thereunder as provided by sec_381 of the code and sec_1_381_c_2_-1 of the regulations holding_company will succeed to and take into account the earnings_and_profits or deficit in earnings_and_profits of corporation as of the date of transfer any deficit in the earnings or profits of either corporation or holding_company will be used only to offset the earnings_and_profits accumulated after the date of transfer sec_381 of the code sec_1374 will not subject the assets that are transferred from corporation to holding_company to the built-in_gain provisions of sec_1374 but to the extent that assets are presently subject_to the built-in_gain provisions of sec_1374 they will continue to be subject_to the built-in_gain provisions of sec_1374 on the same basis as they were subject_to such provisions in corporation based solely on the information submitted and on the representations set forth above we hold as follows with respect to the corporation proposed transaction for federal_income_tax purposes the contribution and liquidation will be treated as the transfer by corporation of substantially_all of its assets to holding_company in exchange for holding_company stock and the transfer to holding_company of all of the liabilities of corporation followed by the liquidation of corporation the contribution and liquidation will constitute a reorganization within the meaning of sec_368 of the code for purposes of this ruling substantially_all means at least percent of the fair_market_value of the net assets and at least percent of the fair_market_value of the gross assets of corporation holding_company and corporation will each be a_party_to_a_reorganization within the meaning of sec_368 of the code no gain_or_loss will be recognized to corporation on the transfer of substantially_all of its assets to holding_company in exchange for holding_company voting_stock sec_361 and sec_357 of the code plr-107595-02 no gain_or_loss will be recognized to holding_company upon the receipt of substantially_all of the assets of corporation in exchange for holding_company voting_stock sec_1032 of the code no gain_or_loss will be recognized to the corporation shareholders by reason of the exchange of their shares of corporation stock solely for shares of holding_company voting_stock sec_354 of the code no gain_or_loss will be recognized to corporation upon the distribution of holding_company voting_stock to the corporation shareholders sec_361 of the code the basis of the corporation assets in the hands of holding_company will be the same as the basis of those assets in the hands of corporation immediately prior to the transfer sec_362 of the code the holding_period of the corporation assets in the hands of holding_company will include the period during which such assets were held by corporation sec_1223 of the code the basis of the shares of holding_company voting_stock received by the corporation shareholders will be the same in each instance as their basis in the corporation stock surrendered in exchange therefor sec_358 of the code the holding_period of the holding_company voting_stock received by the corporation shareholders will include the holding_period of the corporation stock surrendered in exchange therefor provided that such corporation stock is held as a capital_asset on the date of the exchange sec_1223 of the code the taxable_year of corporation will end at the close of the day before the qsub election becomes effective on the date of the transfer of its assets to holding_company sec_381 of the code and sec_1_381_b_-1 and sec_1_1361-4 of the regulations pursuant to sec_381 of the code and sec_1_381_a_-1 of the regulations holding_company will succeed to and take into account as of the date of the proposed transfer as defined in sec_1_381_b_-1 of the regulations the items of corporation described in sec_381 of the code subject_to the conditions and limitations specified in sec_381 sec_382 sec_383 and sec_384 of the code and plr-107595-02 the regulations thereunder as provided by sec_381 of the code and sec_1_381_c_2_-1 of the regulations holding_company will succeed to and take into account the earnings_and_profits or deficit in earnings_and_profits of corporation as of the date of transfer any deficit in the earnings or profits of either corporation or holding_company will be used only to offset the earnings_and_profits accumulated after the date of transfer sec_381 of the code sec_1374 will not subject the assets that are transferred from corporation to holding_company to the built-in_gain provisions of sec_1374 but to the extent that assets are presently subject_to the built-in_gain provisions of sec_1374 they will continue to be subject_to the built-in_gain provisions of sec_1374 on the same basis as they were subject_to such provisions in corporation based solely on the information submitted and on the representations set forth above we further hold as follows with respect to the proposed transaction holding_company will succeed to the accumulated adjustment accounts aaa of corporation through corporation and the aaa of holding_company will equal the sum of the aaas of corporation through corporation and holding_company none of corporation through corporation will be treated as a subchapter_c_corporation for any period solely because of the transfer of their respective stock to holding_company furthermore based solely on the information submitted and on the representations set forth above and provided that sec_381 applies to the transaction described in this ruling_request and that sec_447 regarding method_of_accounting for corporations engaged in farming does not apply to holding_company we hold as follows with respect to the proposed transaction the inventories of corporation through corporation deemed transferred to holding_company will be taken into account by holding_company on the same basis and methods on which such inventories were taken into account by the corporations holding_company will not be required to treat the inventory received as separate from otherwise identical inventory subsequently acquired or produced holding_company will not be required to renew any election previously made by it or by the corporations with respect to such method of taking inventories and holding_company is bound by any such elections plr-107595-02 sec_1363 will not require corporation through corporation respectively to include in their gross_income any lifo_recapture_amount for the inventory deemed transferred to holding_company subsequent to the transaction holding_company shall be allowed to continue to use the cash_method_of_accounting for federal_income_tax reporting for the integrated business y operations of corporation through corporation ruling sec_3 and immediately above are limited to the issues raised under subsections and of sec_381 regarding the treatment of the method_of_accounting and inventories in certain corporate acquisitions and sec_1363 regarding recapture of lifo benefits we specifically express no opinion regarding the propriety of the use of the cash_method by holding_company in conjunction with the lifo inventory_method we express no opinion about the tax treatment of the transaction under other provisions of the code or the regulations or about the tax treatment of any conditions existing at the time of or effects resulting from the proposed transaction that are not specifically covered by the above rulings this ruling letter has no effect on any earlier documents and is directed only to the taxpayer who requested it sec_6110 of the code provides that it may not be used or cited as precedent each affected taxpayer must attach a copy of this letter to the taxpayer’s federal_income_tax return for the taxable_year in which the transaction covered by this letter_ruling is consummated in accordance with the power_of_attorney on file in this office a copy of this letter is being sent to the taxpayer associate chief_counsel corporate sincerely yours by mark s jennings chief branch cc plr-107595-02