internal_revenue_service number release date index number ---------------------------------------------- ------------------------ ---------------------------------------- ---------------------------------------- ------------------------------ department of the treasury washington dc third party communication none date of communication not applicable_person to contact ------------------------ id no ------------------- ---------------------------------------------------- telephone number ---------------------- refer reply to cc corp plr-152204-11 date date legend distributing -------------------------------------------------------------------- ------------------------------------------------------------ -------------------------------------------------- distributing ------------------------------------------------------------------------------------------------------ ---------------------------------------------- distributing ------------------------------------------------------------------------------------------------------------ -------------------------------------------------- distributing -------------------------------------------------------------------------------------------------------- ------------------------------------------------------ controlled -------------------------------------------------------------------- ----------------------------------------- controlled ------------------------------------------------------------------------------------------------------ -------------------------------------------------------- controlled ------------------------------------------------------------------------------------------------------------ ----------------------------------------------- controlled -------------------------------------------------------------------------------------------------------- ---------------------------------------------------------------- fsub 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------------------------------------------------------------------------------------------------------ -------------------------------------------------- sub -------------------------------------------------------------------- ------------------------------------------------------------ ------------------------------------------------------------- sub -------------------------------------------------------------------- ------------------------------------------------------------ ------------------------------------------------------------ sub -------------------------------------------------------------------- ----------------------------------------- llc ------------------------------------------------------------------------------------- ---------------------------------------------------------- llc ------------------------------------------------------------------------------------- ------------------------------------------------------------------- plr-152204-11 llc ------------------------------------------------------------------------------------------------------------- ------------------------------------------------------------------------------------- -------------------------------------------------------------------------------- business a --------------------------------------------------------------------------------- --------------------------------------------------------------------------------- ------------------------------------------------------------------------- ------- --------------------------------------------------------------------------------- --------------------------------------------------------------------------------- --------------------------------------------------------------------------------- -------------------- business b -------------------------------------------------------------------------------------------------------- --------------------------------------------------------------------------------- a b c d e f g h i j k l m state a state b ---- -------- -------- -------- ------ ---- ---- -- ---------- ---------- -------- ------------ ---- -------------- -------------- plr-152204-11 country a country b country c country d country e country f country g country h country i --------- --------------- --------- --------------------- ---------- --------- ---------------------------- -------------- ------------------ prior transactions country j contribution distributing contribution distribution agreements --------------------------------------------------------------------------------- --------------------------------------------------------------------------------- --------------------------------------------------------------------------------- --------------------------------------------------------------------------------- --------------------------------------------------------------------------------- --------------------------------------------------------------------------------- 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--------------------------------------------------------------------------------- ------------- dear --------------------- this letter responds to your representative’s letter dated date requesting rulings on certain federal_income_tax consequences of a series of proposed transactions the material information provided in that letter and in subsequent correspondence is summarized below the rulings contained in this letter are based upon information and representations submitted by the taxpayer and accompanied by a penalties of perjury statement executed by an appropriate party while this office has not verified any of the material submitted in support of the request for rulings it is subject_to verification on examination moreover no determination has been made regarding whether any of distribution sec_1 through as defined below i satisfies the business_purpose requirement of sec_1_355-2 ii is used principally as a device for the distribution of the earnings_and_profits of the distributing_corporation or the controlled_corporation or both see sec_355 and sec_1_355-2 or iii is part of a plan or series of related transactions pursuant to which one or more persons will acquire directly or indirectly stock representing a 50-percent_or_greater_interest in the distributing_corporation or the controlled_corporation see sec_355 and sec_1_355-7 summary of the facts distributing is a publicly traded state a corporation and is the common parent of an affiliated_group_of_corporations that elects to file consolidated federal_income_tax returns distributing is engaged directly and through its affiliates in business a and business b distributing wholly owns i llc a limited_liability_company that is disregarded as an entity separate from its owner for federal tax purposes a disregarded_entity ii sub iii sub iv sub v distributing vi controlled vii fsub viii fsub and ix a number of subsidiaries engaged solely in business b the business b subsidiaries controlled is a dormant entity with nominal assets in addition distributing owns i a percent of the stock of fsub ii b percent of stock of distributing iii c percent of the stock of fsub and iv d percent of the stock of fsub llc wholly owns distributing distributing wholly owns controlled and fsub a disregarded_entity and owns e percent of the stock of distributing plr-152204-11 fsub wholly owns i fsub a disregarded_entity ii fsub a disregarded_entity iii fsub a disregarded_entity iv fsub a disregarded_entity v fsub a disregarded_entity and vi fsub fsub wholly owns fsub a disregarded_entity fsub wholly owns fsub a disregarded_entity sub wholly owns i llc a disregarded_entity ii fsub iii fsub and iv fsub a disregarded_entity in addition sub owns f percent of the stock of fsub and g percent of the interests in fsub a disregarded_entity llc owns the remaining h percent of the interests in fsub sub also operates branches or representative offices in a number of countries outside the united_states fsub wholly owns fsub fsub owns i percent of the stock of fsub distributing wholly owns fsub and fsub distributing wholly owns fsub and directly conducts both business a and business b except as noted above each of the entities listed above is classified as a corporation for federal tax purposes proposed transactions for the purpose of separating business a and business b distributing proposed the following steps some of which are completed i ii iii iv v distributing formed controlled as a corporation under state b law distributing formed controlled under the laws of country b and controlled made an initial election under sec_301 to be treated as a disregarded_entity sub formed llc a disregarded_entity under state b law distributing will contribute i all of its directly held business b assets ii all of the stock of fsub and iii all of the stock of fsub to controlled controlled will elect under sec_301_7701-3 to be treated as a corporation for federal tax purposes contribution plr-152204-11 vi vii viii ix x xi xii xiii xiv xv xvi distributing will distribute all of the stock of controlled pro_rata to distributing and distributing distribution distributing will contribute the stock of controlled to fsub fsub fsub fsub and fsub each will separate its business b assets from its business a assets through a transfer between such entity and one or more other companies that are disregarded entities under distributing all such transfers will be disregarded for federal_income_tax purposes fsub will sell its business b assets to a newly formed subsidiary of controlled that will be a disregarded_entity in exchange for a note the transitory controlled note and will immediately distribute the transitory controlled note through fsub and fsub to fsub fsub will contribute all of its assets relating to business b including the stock of fsub the interests in disregarded entities conducting business b and the transitory controlled note to controlled the fsub contribution fsub will distribute all of the stock of controlled to distributing distributing will contribute its e-percent interest in controlled to controlled together with the fsub contribution contribution distributing will distribute all of the stock of controlled to llc distribution llc will distribute all of the stock of controlled to distributing distributing will sell all of its business a assets including directly held assets and the stock of fsub to controlled in exchange for a note the controlled note distributing will distribute the controlled note to distributing distributing will contribute the controlled note to controlled in exchange for shares of controlled stock with a value equal to the amount of the controlled note the controlled shares received by distributing in this step will constitute percent or more of the single outstanding class of controlled shares as described below steps xiv through xvi will be treated for federal_income_tax purposes as if distributing contributes its business a assets to plr-152204-11 xvii xviii xix xx xxi xxii xxiii xxiv xxv xxvi xxvii controlled in exchange for controlled stock contribution and then distributes such controlled stock to distributing distribution fsub will contribute all of its business a assets to fsub in exchange for additional shares of fsub stock fsub will distribute all of the stock of fsub to sub sub will contribute all of its interests in fsub and fsub to llc sub 1’s branches or representative offices other than sub 1’s country a representative office and sub 1’s country i branch that hold both business b assets and business a assets will transfer their business a assets to llc or to a disregarded_entity owned by distributing sub 1’s branch located in country i will sell its business a assets to a disregarded_entity owned by distributing in exchange for cash llc will form a new company under the laws of country c country c newco that will be treated as a corporation for federal tax purposes and contribute cash thereto llc will form a new company under the laws of country d country d newco that will be treated as a corporation for federal tax purposes and contribute cash thereto fsub will sell all of its business a assets to country c newco in exchange for cash sub 1’s branch located in country d will sell its business a assets to country d newco in exchange for cash one of distributing 4’s u s affiliates will form a new representative office in country a and sub will sell its business a assets located in country a to the new representative office and or to one or more existing country a subsidiaries of distributing in exchange for cash distributing will form a new state b limited_liability_company that will be a disregarded_entity sub llc and sub will merge under state a and state b law with and into sub llc with sub llc surviving liquidation plr-152204-11 xxviii xxix xxx xxxi xxxii xxxiii xxxiv xxxv xxxvi xxxvii sub llc will distribute i all of the interests in llc ii all of the stock of fsub and iii its g-percent interest in fsub to distributing distributing will form a new company under the laws of country e country e newco and contribute cash thereto distributing will own j percent of the stock of country e newco llc will own the remaining k percent of the stock of country e newco fsub and fsub will sell their business a assets to country e newco in exchange for cash sub will transfer the business b assets of its country f branch to llc distributing will form a new state b limited_liability_company that will be a disregarded_entity sub llc and sub will merge under state a and state b law with and into sub llc with sub llc surviving liquidation sub llc will distribute all of the interests in llc to distributing distributing will contribute all of the stock of fsub and distributing 4’s b-percent interest in controlled to controlled contribution controlled will contribute all of the stock of fsub received in the preceding step to controlled contribution sub will transfer its business b assets to distributing in partial repayment of debt distributing will contribute its assets related to business b including all of its stock of or interests in the following entities to controlled the business b subsidiaries fsub fsub controlled sub llc fsub llc distributing and fsub xxxviii controlled may borrow cash from a third-party lender and distribute the cash to distributing together with step i and the immediately preceding step contribution it is anticipated that the amount of cash will not exceed dollar_figurel xxxix distributing will distribute all of the stock of controlled to distributing 4’s shareholders pro_rata distribution no plr-152204-11 fractional shares of controlled stock will be distributed in distribution instead the distribution agent will aggregate all fractional shares into whole shares and sell the whole shares in the open market at prevailing market prices the distribution agent will then distribute the aggregate cash proceeds of the sales net of brokerage fees and other costs pro_rata to each stockholder of distributing who would otherwise have been entitled to receive a fractional share in distribution xl distributing will use any cash received from controlled in step xxxviii to repay a portion of its publicly held debt to make a distribution to shareholders and or to repurchase shares in each case within m months of distribution representations the following representations have been made with respect to contribution and distribution a b c d the total adjusted_basis of the assets transferred to controlled by distributing in contribution will equal or exceed the sum of any liabilities assumed within the meaning of sec_357 by controlled the total fair_market_value of the assets transferred to controlled in contribution will exceed the sum of i the amount of any liabilities assumed within the meaning of sec_357 by controlled in the exchange ii the amount of any liabilities owed to controlled by distributing that are discharged or extinguished in connection with the exchange and iii the amount of cash and the fair_market_value of any other_property other than stock and securities permitted to be received under sec_361 without recognition of gain received by distributing in the exchange the fair_market_value of the assets of controlled will exceed the amount of controlled 1’s liabilities immediately after contribution any liabilities assumed within the meaning of sec_357 by controlled in contribution will have been incurred in the ordinary course of business and will be associated with the assets transferred no investment_tax_credit determined under sec_46 has been or will be claimed for any property that will be transferred by distributing to controlled pursuant to contribution plr-152204-11 e f g h i j k l no part of the consideration to be distributed by distributing will be received by a shareholder as a creditor employee or in any capacity other than that of a shareholder of distributing each of the parties to distribution will pay its own expenses if any incurred in connection with distribution the five years of financial information submitted on behalf of the country b business a conducted by the distributing sag is representative of the present business operations of the country b business a and with regard to such business there have been no substantial operational changes since the date of the last financial statements submitted except pursuant to the prior transactions neither the country b business a nor control of an entity conducting this business was acquired during the five-year period ending on the date of distribution in a transaction in which gain_or_loss was recognized or treated as recognized under prop sec_1_355-3 in whole or in part the five years of financial information submitted on behalf of the country b business b conducted by the distributing sag is representative of the present business operations of the country b business b and with regard to such business there have been no substantial operational changes since the date of the last financial statements submitted except pursuant to the prior transactions neither the country b business b nor control of an entity conducting this business was acquired during the five-year period ending on the date of distribution in a transaction in which gain_or_loss was recognized or treated as recognized under prop sec_1_355-3 in whole or in part following distribution the distributing sag will continue the active_conduct of the country b business a independently and with its separate employees following distribution the controlled sag will continue the active_conduct of the country b business b independently and with its separate employees plr-152204-11 m n o p q r s distribution is not being used principally as a device for the distribution of the earnings_and_profits of distributing or controlled or both distribution is being carried out for the corporate business_purpose of facilitating distribution and is motivated in whole or substantial part by this corporate business_purpose other than indebtedness arising from i the provision of shared services in the ordinary course of business prior to distribution or ii transition services following distribution all of which will be resolved in the ordinary course of business or pursuant to the terms of a transition services agreement no intercorporate debt will exist between distributing and controlled at the time of or subsequent to distribution payments made in connection with all continuing transactions if any between distributing and controlled will be for fair_market_value based on terms and conditions arrived at by the parties bargaining at arm’s length no two parties to the transaction are investment companies as defined in sec_368 and iv for purposes of sec_355 immediately after distribution no person determined after applying the aggregation rules of sec_355 will hold stock possessing percent or more of the total combined voting power of all classes of distributing stock entitled to vote or percent or more of the total value of shares of all classes of distributing stock that was acquired by purchase as defined in sec_355 and during the five-year period determined after applying sec_355 ending on the date of distribution for purposes of sec_355 immediately after distribution no person determined after applying the aggregation rules of sec_355 will hold stock possessing percent or more of the total combined voting power of all classes of controlled stock entitled to vote or percent or more of the total value of shares of all classes of controlled stock that was either i acquired by purchase as defined in sec_355 and during the five- year period determined after applying sec_355 ending on the date of distribution or ii attributable to distributions on distributing stock that was acquired by purchase as defined in sec_355 and during the five-year period determined plr-152204-11 t u v w x y z after applying sec_355 ending on the date of distribution distribution is not part of a plan or series of related transactions within the meaning of sec_1_355-7 pursuant to which one or more persons other than persons described in sec_355 will acquire directly or indirectly stock representing a 50-percent_or_greater_interest within the meaning of sec_355 in either distributing or controlled including any predecessor or successor of distributing or controlled immediately after the transaction taking into account sec_355 either i no person will hold a 50-percent_or_greater_interest within the meaning of sec_355 in the stock of distributing or controlled who did not hold such an interest immediately before distribution or ii neither distributing nor controlled will be a disqualified_investment_corporation within the meaning of sec_355 neither distributing nor controlled has been a united_states_real_property_holding_corporation within the meaning of sec_897 usrphc at any time during the five-year period ending on the date of distribution and neither distributing nor controlled will be a usrphc immediately after distribution neither distributing nor controlled will hold any united_states real_property interests as defined in sec_897 immediately before or after contribution and distribution distributing 1’s contribution of stock and assets to controlled in contribution is not an exchange described in sec_1_367_b_-4 sec_1_367_b_-4 or sec_1_367_b_-4 the notice requirements of sec_1_367_b_-1 will be satisfied with respect to contribution and distribution immediately before and after contribution and distribution distributing and controlled each will be a controlled_foreign_corporation within the meaning of sec_957 cfc with respect to which distributing will be a sec_1248 shareholder within the meaning of sec_1_367_b_-2 aa at all times before and immediately after contribution and distribution neither distributing nor controlled has been or plr-152204-11 will be a passive_foreign_investment_company within the meaning of sec_1297 pfic bb distribution will not include the transfer of stock in any corporation that has been a u s transferor the transferee foreign_corporation or the transferred corporation with respect to any unexpired gain_recognition_agreement within the meaning of sec_1_367_a_-3 sec_1_367_a_-8 and sec_1_367_a_-8t the following representations have been made with respect to contribution and distribution cc dd ee ff gg hh the total adjusted_basis of the assets transferred to controlled by distributing in contribution will equal or exceed the sum of any liabilities assumed within the meaning of sec_357 by controlled the total fair_market_value of the assets transferred to controlled in contribution will exceed the sum of i the amount of any liabilities assumed within the meaning of sec_357 by controlled in the exchange ii the amount of any liabilities owed to controlled by distributing that are discharged or extinguished in connection with the exchange and iii the amount of cash and the fair_market_value of any other_property other than stock and securities permitted to be received under sec_361 without recognition of gain received by distributing in the exchange the fair_market_value of the assets of controlled will exceed the amount of controlled 2’s liabilities immediately after contribution any liabilities assumed within the meaning of sec_357 by controlled in contribution will have been incurred in the ordinary course of business and will be associated with the assets transferred no investment_tax_credit determined under sec_46 has been or will be claimed for any property that will be transferred by distributing to controlled pursuant to contribution no part of the consideration to be distributed by distributing will be received by a shareholder as a creditor employee or in any capacity other than that of a shareholder of distributing each of the parties to distribution will pay its own expenses if any incurred in connection with distribution plr-152204-11 ii jj kk ll mm nn oo pp qq the five years of financial information submitted on behalf of the country g business a conducted by the distributing sag is representative of the present business operations of the country g business a and with regard to such business there have been no substantial operational changes since the date of the last financial statements submitted neither the country g business a nor control of an entity conducting this business was acquired during the five-year period ending on the date of distribution in a transaction in which gain_or_loss was recognized or treated as recognized under prop sec_1_355-3 in whole or in part the five years of financial information submitted on behalf of the country g business b conducted by the distributing sag is representative of the present business operations of the country g business b and with regard to such business there have been no substantial operational changes since the date of the last financial statements submitted neither the country g business b nor control of an entity conducting this business was acquired during the five-year period ending on the date of distribution in a transaction in which gain_or_loss was recognized or treated as recognized under prop sec_1_355-3 in whole or in part following distribution the distributing sag will continue the active_conduct of the country g business a independently and with its separate employees following distribution the controlled sag will continue the active_conduct of the country g business b independently and with its separate employees distribution is not being used principally as a device for the distribution of the earnings_and_profits of distributing or controlled or both distribution is being carried out for the corporate business_purpose of facilitating distribution and is motivated in whole or substantial part by this corporate business_purpose other than indebtedness arising from i the provision of shared services in the ordinary course of business prior to distribution or ii transition services following distribution all of which will be plr-152204-11 rr ss tt uu vv resolved in the ordinary course of business or pursuant to the terms of a transition services agreement no intercorporate debt will exist between distributing and controlled at the time of or subsequent to distribution payments made in connection with all continuing transactions if any between distributing and controlled will be for fair_market_value based on terms and conditions arrived at by the parties bargaining at arm’s length no two parties to the transaction are investment companies as defined in sec_368 and iv for purposes of sec_355 immediately after distribution no person determined after applying the aggregation rules of sec_355 will hold stock possessing percent or more of the total combined voting power of all classes of distributing stock entitled to vote or percent or more of the total value of shares of all classes of distributing stock that was acquired by purchase as defined in sec_355 and during the five-year period determined after applying sec_355 ending on the date of distribution for purposes of sec_355 immediately after distribution no person determined after applying the aggregation rules of sec_355 will hold stock possessing percent or more of the total combined voting power of all classes of controlled stock entitled to vote or percent or more of the total value of shares of all classes of controlled stock that was either i acquired by purchase as defined in sec_355 and during the five- year period determined after applying sec_355 ending on the date of distribution or ii attributable to distributions on distributing stock that was acquired by purchase as defined in sec_355 and during the five-year period determined after applying sec_355 ending on the date of distribution distribution is not part of a plan or series of related transactions within the meaning of sec_1_355-7 pursuant to which one or more persons other than persons described in sec_355 will acquire directly or indirectly stock representing a 50-percent_or_greater_interest within the meaning of sec_355 in either distributing or controlled including any predecessor or successor of distributing or controlled plr-152204-11 ww xx yy zz aaa bbb ccc ddd eee immediately after the transaction taking into account sec_355 either i no person will hold a 50-percent_or_greater_interest within the meaning of sec_355 in the stock of distributing or controlled who did not hold such an interest immediately before distribution or ii neither distributing nor controlled will be a disqualified_investment_corporation within the meaning of sec_355 neither distributing nor controlled has been a usrphc at any time during the five-year period ending on the date of distribution and neither distributing nor controlled will be a usrphc immediately after distribution neither distributing nor controlled will hold any united_states real_property interests as defined in sec_897 immediately before or after contribution and distribution distributing 2’s contribution of stock and assets to controlled in contribution is not an exchange described in sec_1_367_b_-4 sec_1_367_b_-4 or sec_1_367_b_-4 the notice requirements of sec_1_367_b_-1 will be satisfied with respect to contribution and distribution immediately before and after contribution and distribution distributing and controlled each will be a cfc with respect to which distributing will be a sec_1248 shareholder within the meaning of sec_1_367_b_-2 at all times before and immediately after contribution and distribution neither distributing nor controlled has been or will be a pfic with respect to any existing gain_recognition_agreement entered into by distributing in connection with a prior transfer of stock_or_securities to distributing distributing will comply with sec_1_367_a_-8t and sec_1_367_a_-8 as applicable there is no regulatory legal contractual or economic compulsion or requirement that distributing make part or all of the country j contribution or the distributing contribution as a condition to distribution the fact that the value of distributing will decrease as a result of distribution is not a consideration in the decision to contribute property to distributing distribution is not contingent plr-152204-11 on there being contributed to distributing assets having a specified or a roughly specified value the following representations have been made with respect to contribution and distribution fff ggg hhh iii jjj kkk lll the total adjusted_basis of the assets transferred to controlled by distributing in contribution will equal or exceed the sum of any liabilities assumed within the meaning of sec_357 by controlled the total fair_market_value of the assets transferred to controlled in contribution will exceed the sum of i the amount of any liabilities assumed within the meaning of sec_357 by controlled in the exchange ii the amount of any liabilities owed to controlled by distributing that are discharged or extinguished in connection with the exchange and iii the amount of cash and the fair_market_value of any other_property other than stock and securities permitted to be received under sec_361 without recognition of gain received by distributing in the exchange the fair_market_value of the assets of controlled will exceed the amount of controlled 3’s liabilities immediately after contribution any liabilities assumed within the meaning of sec_357 by controlled in contribution will have been incurred in the ordinary course of business and will be associated with the assets transferred no investment_tax_credit determined under sec_46 has been or will be claimed for any property that will be transferred by distributing to controlled pursuant to contribution no part of the consideration to be distributed by distributing will be received by a shareholder as a creditor employee or in any capacity other than that of a shareholder of distributing each of the parties to distribution will pay its own expenses if any incurred in connection with distribution the five years of financial information submitted on behalf of the country h business b conducted by the distributing sag is representative of the present business operations of the country h business b and with regard to such business there have been no substantial operational changes since the date of the last financial statements submitted plr-152204-11 mmm nnn ooo ppp qqq rrr sss ttt neither the country h business b nor control of an entity conducting this business was acquired during the five-year period ending on the date of distribution in a transaction in which gain_or_loss was recognized or treated as recognized under prop sec_1_355-3 in whole or in part the five years of financial information submitted on behalf of the country h business a conducted by the distributing sag is representative of the present business operations of the country h business a and with regard to such business there have been no substantial operational changes since the date of the last financial statements submitted neither the country h business a nor control of an entity conducting this business was acquired during the five-year period ending on the date of distribution in a transaction in which gain_or_loss was recognized or treated as recognized under prop sec_1_355-3 in whole or in part following distribution the distributing sag will continue the active_conduct of the country h business b independently and with its separate employees following distribution the controlled sag will continue the active_conduct of the country h business a independently and with its separate employees distribution is not being used principally as a device for the distribution of the earnings_and_profits of distributing or controlled or both distribution is being carried out for the corporate business_purpose of facilitating distribution and is motivated in whole or substantial part by this corporate business_purpose other than indebtedness arising from i the provision of shared services in the ordinary course of business prior to distribution or ii transition services following distribution all of which will be resolved in the ordinary course of business or pursuant to the terms of a transition services agreement no intercorporate debt will exist between distributing and controlled at the time of or subsequent to distribution uuu payments made in connection with all continuing transactions if any between distributing and controlled will be for fair market plr-152204-11 vvv www xxx yyy zzz value based on terms and conditions arrived at by the parties bargaining at arm’s length no two parties to the transaction are investment companies as defined in sec_368 and iv for purposes of sec_355 immediately after distribution no person determined after applying the aggregation rules of sec_355 will hold stock possessing percent or more of the total combined voting power of all classes of distributing stock entitled to vote or percent or more of the total value of shares of all classes of distributing stock that was acquired by purchase as defined in sec_355 and during the five-year period determined after applying sec_355 ending on the date of distribution for purposes of sec_355 immediately after distribution no person determined after applying the aggregation rules of sec_355 will hold stock possessing percent or more of the total combined voting power of all classes of controlled stock entitled to vote or percent or more of the total value of shares of all classes of controlled stock that was either i acquired by purchase as defined in sec_355 and during the five- year period determined after applying sec_355 ending on the date of distribution or ii attributable to distributions on distributing stock that was acquired by purchase as defined in sec_355 and during the five-year period determined after applying sec_355 ending on the date of distribution distribution is not part of a plan or series of related transactions within the meaning of sec_1_355-7 pursuant to which one or more persons other than persons described in sec_355 will acquire directly or indirectly stock representing a 50-percent_or_greater_interest within the meaning of sec_355 in either distributing or controlled including any predecessor or successor of distributing or controlled immediately after the transaction taking into account sec_355 either i no person will hold a 50-percent_or_greater_interest within the meaning of sec_355 in the stock of distributing or controlled who did not hold such an interest immediately before distribution or ii neither distributing nor controlled will be a disqualified_investment_corporation within the meaning of sec_355 plr-152204-11 aaaa bbbb cccc dddd eeee ffff gggg neither distributing nor controlled has been a usrphc at any time during the five-year period ending on the date of distribution and neither distributing nor controlled will be a usrphc immediately after distribution neither distributing nor controlled will hold any united_states real_property interests as defined in sec_897 immediately before or after contribution and distribution distributing 3’s contribution of stock and assets to controlled in contribution is not an exchange described in sec_1_367_b_-4 sec_1_367_b_-4 or sec_1_367_b_-4 the notice requirements of sec_1_367_b_-1 will be satisfied with respect to contribution and distribution immediately before and after contribution and distribution distributing and controlled each will be a cfc with respect to which distributing will be a sec_1248 shareholder within the meaning of sec_1_367_b_-2 at all times before and immediately after contribution and distribution neither distributing nor controlled has been or will be a pfic distribution will not include the transfer of stock in any corporation that has been a u s transferor the transferee foreign_corporation or the transferred corporation with respect to any unexpired gain_recognition_agreement within the meaning of sec_1_367_a_-3 sec_1_367_a_-8 and sec_1_367_a_-8t the following representations have been made with respect to liquidation hhhh iiii jjjj distributing on the date of adoption of the plan_of_liquidation the liquidation plan date and at all times thereafter until liquidation is completed will own percent of the single outstanding class of sub stock no shares of sub stock will have been redeemed during the three years preceding the liquidation plan date except for acquisitions occurring more than three years prior to the liquidation plan date sub will not have acquired assets in any nontaxable_transaction at any time plr-152204-11 kkkk llll mmmm nnnn oooo pppp no assets of sub have been or will be disposed of by either sub or distributing except for i dispositions in the ordinary course of business ii dispositions occurring more than three years prior to the liquidation plan date iii sales of branch assets to unrelated parties and iv dispositions pursuant to the proposed transactions liquidation will not be preceded or followed by the reincorporation transfer or sale of all or a part of the business_assets of sub to another corporation i that is the alter ego of sub and ii that directly or indirectly will be owned more than percent in value by persons holding directly or indirectly more than percent in value of the stock of sub for purposes of this representation ownership will be determined by application of the constructive_ownership rules of sec_318 as modified by sec_304 prior to the liquidation plan date no assets of sub will have been distributed in_kind transferred or sold to distributing except for i transactions occurring in the normal course of business and ii transactions occurring more than three years prior to the liquidation plan date sub will report all earned_income represented by assets that will be distributed to distributing such as receivables being reported on a cash_basis unfinished construction contracts commissions due etc the fair_market_value of the assets of sub will exceed its liabilities both at the liquidation plan date and immediately prior to the effective time of liquidation there is no intercorporate debt existing between sub and distributing and none has been cancelled forgiven or discounted except for i transactions that occurred more than three years prior to the liquidation plan date and ii indebtedness arising from a the provision of services in the ordinary course of business prior to distribution or b transition services following distribution any indebtedness arising under the transition services agreement will be satisfied in accordance with the terms of the transition services agreement all other indebtedness will be resolved prior to contribution qqqq distributing is not an organization that is exempt from federal_income_tax under sec_501 or any other provision of the code plr-152204-11 rrrr all other transactions undertaken contemporaneously with in anticipation of in conjunction with or in any way related to liquidation have been fully disclosed the following representations have been made with respect to liquidation ssss tttt uuuu vvvv wwww xxxx yyyy distributing on the date of adoption of the plan_of_liquidation the liquidation plan date and at all times thereafter until liquidation is completed will own percent of the single outstanding class of sub stock no shares of sub stock will have been redeemed during the three years preceding the liquidation plan date except for acquisitions occurring more than three years prior to the liquidation plan date sub will not have acquired assets in any nontaxable_transaction at any time no assets of sub have been or will be disposed of by either sub or distributing except for i dispositions in the ordinary course of business ii dispositions occurring more than three years prior to the liquidation plan date and iii dispositions pursuant to the proposed transactions liquidation will not be preceded or followed by the reincorporation transfer or sale of all or a part of the business_assets of sub to another corporation i that is the alter ego of sub and ii that directly or indirectly will be owned more than percent in value by persons holding directly or indirectly more than percent in value of the stock of sub for purposes of this representation ownership will be determined by application of the constructive_ownership rules of sec_318 as modified by sec_304 prior to the liquidation plan date no assets of sub will have been distributed in_kind transferred or sold to distributing except for i transactions occurring in the normal course of business and ii transactions occurring more than three years prior to the liquidation plan date sub will report all earned_income represented by assets that will be distributed to distributing such as receivables being reported on a cash_basis unfinished construction contracts commissions due etc plr-152204-11 zzzz aaaaa bbbbb ccccc the fair_market_value of the assets of sub will exceed its liabilities both at the liquidation plan date and immediately prior to the effective time of liquidation there is no intercorporate debt existing between sub and distributing and none has been cancelled forgiven or discounted except for i transactions that occurred more than three years prior to the liquidation plan date and ii indebtedness arising from the provision of services in the ordinary course of business distributing is not an organization that is exempt from federal_income_tax under sec_501 or any other provision of the code all other transactions undertaken contemporaneously with in anticipation of in conjunction with or in any way related to liquidation have been fully disclosed the following representations have been made with respect to contribution ddddd eeeee fffff ggggg hhhhh iiiii no stock_or_securities will be issued for services rendered to or for the benefit of controlled in connection with contribution and no stock_or_securities will be issued for indebtedness of controlled that is not evidenced by a security or for interest on indebtedness of controlled that accrued on or after the beginning of the holding_period of distributing for the debt none of the stock to be transferred in contribution is sec_306 stock within the meaning of sec_306 the transfer is not the result of the solicitation by a promoter broker or investment house distributing will not retain any rights in the property transferred to controlled the total adjusted_basis of the property to be transferred by distributing to controlled in contribution will equal or exceed the sum of the liabilities to be assumed within the meaning of sec_357 by controlled the total fair_market_value of the assets transferred to controlled in contribution will exceed the sum of i the amount of any liabilities assumed within the meaning of sec_357 by controlled in the exchange ii the amount of any liabilities owed plr-152204-11 to controlled by distributing that are discharged or extinguished in connection with the exchange and iii the amount of cash and the fair_market_value of any other_property other than stock permitted to be received under sec_351 without recognition of gain received by distributing in the exchange the fair_market_value of the assets of controlled will exceed the amount of its liabilities immediately after contribution the liabilities of distributing to be assumed within the meaning of sec_357 by controlled will have been incurred in the ordinary course of business and will be associated with the assets transferred the aggregate fair_market_value of the property to be transferred by distributing to controlled in contribution will equal or exceed distributing 4’s aggregate adjusted_basis in such property no investment_tax_credit determined under sec_46 has been or will be claimed for any property that will be transferred by distributing to controlled pursuant to contribution jjjjj kkkkk lllll mmmmm there is no indebtedness between controlled and distributing and there will be no indebtedness created in favor of distributing as a result of contribution nnnnn ooooo ppppp qqqqq rrrrr the transfers and exchanges will occur under a plan agreed upon before the transaction in which the rights of the parties are defined all exchanges will occur on approximately the same date there is no plan or intention on the part of controlled to redeem or otherwise reacquire any stock to be issued in contribution except pursuant to contribution there is no plan or intention on the part of distributing to dispose_of any of the controlled stock received in contribution taking into account any issuance of additional shares of controlled stock any issuance of stock for services the exercise of any controlled stock_rights warrants or subscriptions a public offering of controlled stock and the sale exchange transfer by gift or other_disposition of any of the stock of controlled to be received in contribution distributing will be in control of controlled within the meaning of sec_368 plr-152204-11 sssss ttttt uuuuu vvvvv wwwww xxxxx yyyyy zzzzz aaaaaa bbbbbb cccccc dddddd distributing will receive stock of controlled with a value approximately equal to the fair_market_value of the property transferred to controlled there is no plan or intention by controlled to dispose_of the transferred property other than in the normal course of business operations controlled will remain in existence and will retain and use the property transferred to it in a trade_or_business each of the parties to contribution will pay its own expenses if any incurred in connection with contribution controlled will not be an investment_company within the meaning of sec_351 and sec_1_351-1 distributing is not under the jurisdiction of a court in a title_11_or_similar_case within the meaning of sec_368 and the stock received in the exchange will not be used to satisfy the indebtedness of such debtor controlled will not be a personal_service_corporation within the meaning of sec_269a immediately before and after contribution controlled fsub and controlled each will be a cfc with respect to which distributing will be a sec_1248 shareholder within the meaning of sec_1_367_b_-2 at all times before and immediately after contribution none of controlled fsub and controlled has been or will be a pfic distributing 4’s contribution of the stock of fsub and controlled to controlled in exchange for controlled stock that will be issued or deemed issued in contribution is not an exchange described in sec_1_367_b_-4 sec_1_367_b_-4 or sec_1_367_b_-4 the notice requirements of sec_1_367_b_-1 will be satisfied with respect to contribution distributing will comply with sec_1_367_b_-4 with respect to subsequent exchanges of controlled equity interests as applicable plr-152204-11 eeeeee distributing will enter into a gain_recognition_agreement satisfying the requirements of sec_1_367_a_-8 with respect to the transfer by distributing of the stock of each of fsub and controlled to controlled in contribution and such gain recognition agreements will be included in distributing 4’s timely filed return for the taxable_year in which contribution occurs distributing 4’s gain_recognition_agreement with respect to the stock of fsub will properly reflect controlled 2’s transfer of fsub to controlled in contribution in addition controlled will in accordance with sec_1_367_a_-8 enter into a new gain_recognition_agreement as described in sec_1 a - c with respect to the stock of each of fsub and controlled that designates controlled as the u s transferor for purposes of sec_1_367_a_-8 such new gain recognition agreements will properly reflect distributing 4’s transfer of controlled to controlled in contribution and in accordance with sec_1_367_a_-8 will be filed by distributing on controlled 4’s behalf further controlled will in accordance with sec_1_367_a_-8 enter in a new gain_recognition_agreement as described in sec_1_367_a_-8 with respect to the stock of each of fsub and controlled such new gain recognition agreements will properly reflect controlled 4’s deconsolidation in distribution and will be included in controlled 4’s timely filed tax_return for the taxable_year in which distribution occurs the following representations have been made with respect to contribution ffffff gggggg hhhhhh no stock_or_securities will be issued for services rendered to or for the benefit of controlled in connection with contribution and no stock_or_securities will be issued for indebtedness of controlled that is not evidenced by a security or for interest on indebtedness of controlled that accrued on or after the beginning of the holding_period of controlled for the debt none of the stock to be transferred in contribution is sec_306 stock within the meaning of sec_306 the transfer is not the result of the solicitation by a promoter broker or investment house iiiiii controlled will not retain any rights in the property transferred to controlled plr-152204-11 jjjjjj kkkkkk the total adjusted_basis of the property to be transferred by controlled to controlled in contribution will equal or exceed the sum of the liabilities to be assumed within the meaning of sec_357 by controlled the total fair_market_value of the assets transferred to controlled in contribution will exceed the sum of i the amount of any liabilities assumed within the meaning of sec_357 by controlled in the exchange ii the amount of any liabilities owed to controlled by controlled that are discharged or extinguished in connection with the exchange and iii the amount of cash and the fair_market_value of any other_property other than stock permitted to be received under sec_351 without recognition of gain received by controlled in the exchange the fair_market_value of the assets of controlled will exceed the amount of its liabilities immediately after contribution llllll the liabilities of controlled to be assumed within the meaning of sec_357 by controlled will have been incurred in the ordinary course of business and will be associated with the assets transferred mmmmmm the aggregate fair_market_value of the property to be transferred by controlled to controlled in contribution will equal or exceed controlled 2’s aggregate adjusted_basis in such property nnnnnn oooooo no investment_tax_credit determined under sec_46 has been or will be claimed for any property that will be transferred by controlled to controlled pursuant to contribution there is no indebtedness between controlled and controlled and there will be no indebtedness created in favor of controlled as a result of contribution pppppp the transfers and exchanges will occur under a plan agreed upon before the transaction in which the rights of the parties are defined qqqqqq all exchanges will occur on approximately the same date rrrrrr ssssss there is no plan or intention on the part of controlled to redeem or otherwise reacquire any stock to be issued in contribution there is no plan or intention on the part of controlled to dispose_of any of the controlled stock received in contribution plr-152204-11 tttttt taking into account any issuance of additional shares of controlled stock any issuance of stock for services the exercise of any controlled stock_rights warrants or subscriptions a public offering of controlled stock and the sale exchange transfer by gift or other_disposition of any of the stock of controlled to be received in contribution controlled will be in control of controlled within the meaning of sec_368 uuuuuu vvvvvv controlled will receive stock of controlled with a value approximately equal to the fair_market_value of the property transferred to controlled there is no plan or intention by controlled to dispose_of the transferred property other than in the normal course of business operations wwwwww controlled will remain in existence and will retain and use the property transferred to it in a trade_or_business xxxxxx yyyyyy zzzzzz aaaaaaa bbbbbbb ccccccc ddddddd each of the parties to contribution will pay its own expenses if any incurred in connection with contribution controlled will not be an investment_company within the meaning of sec_351 and sec_1_351-1 controlled is not under the jurisdiction of a court in a title_11_or_similar_case within the meaning of sec_368 and the stock received in the exchange will not be used to satisfy the indebtedness of such debtor controlled will not be a personal_service_corporation within the meaning of sec_269a immediately before and after contribution controlled fsub and controlled each will be a cfc with respect to which distributing will be a sec_1248 shareholder within the meaning of sec_1_367_b_-2 at all times before and immediately after contribution neither fsub nor controlled has been or will be a pfic controlled 2’s contribution of the stock of fsub to controlled in exchange for controlled stock that will be issued or deemed issued in contribution is not an exchange described in sec_1_367_b_-4 sec_1_367_b_-4 or sec_1_367_b_-4 plr-152204-11 eeeeeee the notice requirements of sec_1_367_b_-1 will be satisfied with respect to contribution fffffff controlled will comply with sec_1_367_b_-4 with respect to subsequent exchanges of controlled equity interests as applicable the following representations have been made with respect to contribution and distribution ggggggg hhhhhhh iiiiiii jjjjjjj the total adjusted_basis of the assets transferred to controlled by distributing in contribution will equal or exceed the sum of i any liabilities assumed within the meaning of sec_357 by controlled and ii the total amount of money and the fair_market_value of any other_property within the meaning of sec_361 received by distributing from controlled and transferred to distributing 4’s shareholders or creditors pursuant to the plan_of_reorganization the total fair_market_value of the assets transferred to controlled in contribution will exceed the sum of i the amount of any liabilities assumed within the meaning of sec_357 by controlled in the exchange ii the amount of any liabilities owed to controlled by distributing that are discharged or extinguished in connection with the exchange and iii the amount of cash and the fair_market_value of any other_property other than stock and securities permitted to be received under sec_361 without recognition of gain received by distributing in the exchange the fair_market_value of the assets of controlled will exceed the amount of controlled 4’s liabilities immediately after contribution any liabilities assumed within the meaning of sec_357 by controlled in contribution will have been incurred in the ordinary course of business and will be associated with the assets transferred no investment_tax_credit determined under sec_46 has been or will be claimed for any property that will be transferred by distributing to controlled pursuant to contribution kkkkkkk no part of the consideration to be distributed by distributing will be received by a shareholder as a creditor employee or in any capacity other than that of a shareholder of distributing plr-152204-11 lllllll each of the parties to distribution will pay its own expenses if any incurred in connection with distribution mmmmmmm nnnnnnn ooooooo ppppppp qqqqqqq rrrrrrr sssssss ttttttt the five years of financial information submitted on behalf of the country g business a conducted by the distributing sag is representative of the present business operations of the country g business a and with regard to such business there have been no substantial operational changes since the date of the last financial statements submitted neither the country g business a nor control of an entity conducting this business was acquired during the five-year period ending on the date of distribution in a transaction in which gain_or_loss was recognized or treated as recognized under prop sec_1_355-3 in whole or in part the five years of financial information submitted on behalf of the country g business b conducted by the distributing sag is representative of the present business operations of the country g business b and with regard to such business there have been no substantial operational changes since the date of the last financial statements submitted neither the country g business b nor control of an entity conducting this business was acquired during the five-year period ending on the date of distribution in a transaction in which gain_or_loss was recognized or treated as recognized under prop sec_1_355-3 in whole or in part following distribution the distributing sag will continue the active_conduct of the country g business a independently and with its separate employees following distribution the controlled sag will continue the active_conduct of the country g business b independently and with its separate employees distribution is not being used principally as a device for the distribution of the earnings_and_profits of distributing or controlled or both distribution is being carried out for the corporate business purposes of i enhancing management focus on the specific needs and strategies of each company ii enabling each company to adopt an appropriate capital structure iii enabling each company plr-152204-11 uuuuuuu vvvvvvv wwwwwww xxxxxxx yyyyyyy to adopt an appropriate cost structure iv enhancing investor focus through the creation of two pure-play companies and v enhancing the attractiveness of the stock of both distributing and controlled as an acquisition currency distribution is motivated in whole or substantial part by one or more of these corporate business purposes no intercorporate debt will exist between distributing and controlled at the time of or subsequent to distribution other than indebtedness arising from i the provision of shared services by distributing to controlled in the ordinary course of business prior to distribution or ii transition services following distribution all of which will be resolved in the ordinary course of business or pursuant to the terms of a transition services agreement payments made in connection with all continuing transactions if any between distributing and controlled will be for fair_market_value based on terms and conditions arrived at by the parties bargaining at arm’s length no two parties to the transaction are investment companies as defined in sec_368 and iv for purposes of sec_355 immediately after distribution no person determined after applying the aggregation rules of sec_355 will hold stock possessing percent or more of the total combined voting power of all classes of distributing stock entitled to vote or percent or more of the total value of shares of all classes of distributing stock that was acquired by purchase as defined in sec_355 and during the five-year period determined after applying sec_355 ending on the date of distribution for purposes of sec_355 immediately after distribution no person determined after applying the aggregation rules of sec_355 will hold stock possessing percent or more of the total combined voting power of all classes of controlled stock entitled to vote or percent or more of the total value of shares of all classes of controlled stock that was either i acquired by purchase as defined in sec_355 and during the five- year period determined after applying sec_355 ending on the date of distribution or ii attributable to distributions on distributing stock that was acquired by purchase as defined in sec_355 and during the five-year period determined plr-152204-11 zzzzzzz aaaaaaaa bbbbbbbb cccccccc dddddddd after applying sec_355 ending on the date of distribution distribution is not part of a plan or series of related transactions within the meaning of sec_1_355-7 pursuant to which one or more persons will acquire directly or indirectly stock representing a 50-percent_or_greater_interest within the meaning of sec_355 in either distributing or controlled including any predecessor or successor of distributing or controlled immediately after the transaction taking into account sec_355 either i no person will hold a 50-percent_or_greater_interest within the meaning of sec_355 in the stock of distributing or controlled who did not hold such an interest immediately before distribution or ii neither distributing nor controlled will be a disqualified_investment_corporation within the meaning of sec_355 immediately before distribution items of income gain loss deduction and credit will be taken into account as required by the applicable intercompany_transaction regulations further distributing 4’s excess_loss_account if any with respect to its shares of controlled stock or any direct or indirect subsidiaries of controlled will be included in income immediately before distribution neither distributing nor controlled has been a usrphc at any time during the five-year period ending on the date of distribution and neither distributing nor controlled will be a usrphc immediately after distribution distributing will be a sec_1248 shareholder within the meaning of sec_1_367_b_-2 with respect to each of distributing fsub fsub fsub fsub fsub and controlled immediately before contribution and controlled will be a sec_1248 shareholder with respect to each of distributing fsub fsub fsub fsub fsub and controlled immediately thereafter eeeeeeee each of distributing fsub fsub fsub fsub fsub and controlled will be a cfc immediately before and after contribution ffffffff the amount of distributing debt to be paid_by distributing with cash received from controlled in step xxxviii of the proposed plr-152204-11 gggggggg transactions if any will not exceed the weighted quarterly average of the distributing debt owed to third parties for the 12-month_period ending at the close of business on the last full business_day before the date on which the distributing board_of directors initially discussed the potential separation of controlled from distributing the receipt by distributing shareholders of cash in lieu of fractional shares of controlled stock resulting from the open market sale of the fractional shares has been arranged solely for the purpose of avoiding the expense and inconvenience to distributing and controlled of issuing fractional shares and does not represent separately bargained-for consideration it is intended that the total cash consideration received by the shareholders of distributing from the open market sale of their fractional shares will not exceed one percent of the total consideration that will be distributed in distribution it is also intended that no distributing shareholder will receive cash in an amount equal to or greater than the value of one full share of controlled common_stock rulings based solely on the information submitted and the representations set forth above we rule as follows on contribution and distribution contribution followed by distribution will qualify as a reorganization under sec_368 distributing and controlled each will be a_party_to_a_reorganization within the meaning of sec_368 no gain_or_loss will be recognized by distributing on contribution sec_357 and sec_361 no gain_or_loss will be recognized by controlled on contribution sec_1032 the basis of each asset received by controlled in contribution will equal the basis of such asset in the hands of distributing immediately before contribution sec_362 the holding_period of each asset received by controlled in contribution will include the period during which distributing held such asset sec_1223 plr-152204-11 no gain_or_loss will be recognized by and no amount otherwise will be included in the income of distributing and distributing on their receipt of controlled shares in distribution sec_355 no gain_or_loss will be recognized by distributing as a result of distribution sec_361 the basis of the stock of distributing and controlled in the hands of each shareholder of distributing after distribution will be the same as the basis of the distributing stock held by such shareholder immediately before distribution sec_358 and sec_1_358-1 allocated in proportion to the fair_market_value of the distributing shares and the controlled shares held by such shareholder in accordance with sec_1_358-2 sec_358 and c the holding_period of the controlled shares received by each of distributing and distributing in distribution will include the holding_period of the distributing shares with respect to which distribution will be made provided that such distributing shares are held as capital assets on the date of distribution sec_1223 as provided in sec_312 proper allocation of earnings_and_profits between distributing and controlled will be made under sec_1_312-10 contribution will be an exchange to which sec_1_367_b_-1 and sec_1_367_b_-4 apply no amount will be included in income as a deemed_dividend equal to the sec_1248 amount under sec_367 as a result of contribution distribution will be an exchange to which sec_1_367_b_-1 sec_1_367_b_-5 and sec_1_367_b_-5 apply if distributing 4’s post-distribution amount as defined in sec_1_367_b_-5 with respect to distributing or controlled is less than its pre-distribution amount as defined in sec_1_367_b_-5 with respect to distributing or controlled distributing 4’s basis in such stock immediately after distribution must be reduced by the amount of the difference however distributing 4’s basis in such stock must not be reduced below zero and to the extent the foregoing reduction would reduce its basis below zero distributing must instead include such amount in income as a deemed_dividend from such corporation if plr-152204-11 distributing reduces the basis in the stock of distributing or controlled or has an inclusion with respect to such stock distributing must increase its basis in the stock of the other corporation to the extent provided in sec_1_367_b_-5 based solely on the information submitted and the representations set forth above we rule as follows on contribution and distribution contribution followed by distribution will qualify as a reorganization under sec_368 distributing and controlled each will be a_party_to_a_reorganization within the meaning of sec_368 no gain_or_loss will be recognized by distributing on contribution sec_357 and sec_361 no gain_or_loss will be recognized by controlled on contribution sec_1032 the basis of each asset received by controlled in contribution will equal the basis of such asset in the hands of distributing immediately before contribution sec_362 the holding_period of each asset received by controlled in contribution will include the period during which distributing held such asset sec_1223 no gain_or_loss will be recognized by and no amount otherwise will be included in the income of distributing on its receipt of controlled shares in distribution sec_355 no gain_or_loss will be recognized by distributing as a result of distribution sec_361 the basis of the stock of distributing and controlled in the hands of distributing after distribution will be the same as the basis of the distributing stock held immediately before distribution sec_358 and sec_1_358-1 allocated in proportion to the fair_market_value of the distributing shares and the controlled shares in accordance with sec_1_358-2 sec_358 and c the holding_period of the controlled shares received by distributing in distribution will include the holding_period of the distributing shares with respect to which distribution will be plr-152204-11 made provided that such distributing shares are held as capital assets on the date of distribution sec_1223 as provided in sec_312 proper allocation of earnings_and_profits between distributing and controlled will be made under sec_1_312-10 contribution will be an exchange to which sec_1_367_b_-1 and sec_1_367_b_-4 apply no amount will be included in income as a deemed_dividend equal to the sec_1248 amount under sec_367 as a result of contribution distribution will be an exchange to which sec_1_367_b_-1 sec_1_367_b_-5 and sec_1_367_b_-5 apply if distributing 4’s post-distribution amount as defined in sec_1_367_b_-5 with respect to distributing or controlled is less than its pre-distribution amount as defined in sec_1_367_b_-5 with respect to distributing or controlled distributing 4’s basis in such stock immediately after distribution must be reduced by the amount of the difference however distributing 4’s basis in such stock must not be reduced below zero and to the extent the foregoing reduction would reduce its basis below zero distributing must instead include such amount in income as a deemed_dividend from such corporation if distributing reduces the basis in the stock of distributing or controlled or has an inclusion with respect to such stock distributing must increase its basis in the stock of the other corporation to the extent provided in sec_1_367_b_-5 based solely on the information submitted and the representations set forth above we rule as follows on contribution and distribution for federal_income_tax purposes steps xiv through xvi of the proposed transactions will be treated as if i distributing contributed its business a assets and the stock of fsub to controlled in exchange for all of the shares of controlled contribution and ii distributing distributed all of its shares of controlled stock to distributing distribution rev_rul 1983_2_cb_68 revrul_77_191 c b contribution followed by distribution will qualify as a reorganization under sec_368 distributing and controlled each will be a_party_to_a_reorganization within the meaning of sec_368 plr-152204-11 no gain_or_loss will be recognized by distributing on contribution sec_357 and sec_361 no gain_or_loss will be recognized by controlled on contribution sec_1032 the basis of each asset received by controlled in contribution will equal the basis of such asset in the hands of distributing immediately before contribution sec_362 the holding_period of each asset received by controlled in contribution will include the period during which distributing held such asset sec_1223 no gain_or_loss will be recognized by and no amount otherwise will be included in the income of distributing on its receipt of controlled shares in distribution sec_355 no gain_or_loss will be recognized by distributing as a result of distribution sec_361 the basis of the stock of distributing and controlled in the hands of distributing after distribution will be the same as the basis of the distributing stock held immediately before distribution sec_358 and sec_1_358-1 allocated in proportion to the fair_market_value of the distributing shares and the controlled shares distributed in distribution held by distributing in accordance with sec_1_358-2 sec_358 and c the holding_period of the controlled shares received by distributing in distribution will include the holding_period of the distributing shares with respect to which distribution will be made provided that such distributing shares are held as capital assets on the date of distribution sec_1223 as provided in sec_312 proper allocation of earnings_and_profits between distributing and controlled will be made under sec_1_312-10 contribution will be an exchange to which sec_1_367_b_-1 and sec_1_367_b_-4 apply no amount will be included in income as a deemed_dividend equal to the sec_1248 amount under sec_367 as a result of contribution plr-152204-11 distribution will be an exchange to which sec_1_367_b_-1 sec_1_367_b_-5 and sec_1_367_b_-5 apply if distributing 4’s post-distribution amount as defined in sec_1_367_b_-5 with respect to distributing or controlled is less than its pre-distribution amount as defined in sec_1_367_b_-5 with respect to distributing or controlled distributing 4’s basis in such stock immediately after distribution must be reduced by the amount of the difference however distributing 4’s basis in such stock must not be reduced below zero and to the extent the foregoing reduction would reduce its basis below zero distributing must instead include such amount in income as a deemed_dividend from such corporation if distributing reduces the basis in the stock of distributing or controlled or has an inclusion with respect to such stock distributing must increase its basis in the stock of the other corporation to the extent provided in sec_1_367_b_-5 based solely on the information submitted and the representations set forth above we rule as follows on liquidation liquidation will be treated as a distribution by sub to distributing in complete_liquidation under sec_332 no gain_or_loss will be recognized by distributing on the receipt of all of the assets and assumption of the liabilities of sub in liquidation sec_332 no gain_or_loss will be recognized by sub on the distribution of its assets and liabilities to distributing in liquidation sec_337 distributing 4’s basis in each asset received from sub in liquidation will equal the basis of such asset in the hands of sub immediately before liquidation sec_334 distributing 4’s holding_period in each asset received from sub in liquidation will include the period during which such asset was held by sub sec_1223 distributing will succeed to and take into account the items of sub described in sec_381 subject_to the conditions and limitations specified in sec_381 sec_382 sec_383 and sec_384 and the regulations thereunder sec_381 and sec_1 a - plr-152204-11 except to the extent sub 1’s earnings_and_profits are reflected in distributing 4’s earnings_and_profits distributing will succeed to and take into account the earnings_and_profits or deficit in earnings_and_profits of sub as of the date of liquidation sec_381 sec_1_381_c_2_-1 and sec_1_1502-33 any deficit in the earnings_and_profits of sub can be used only to offset earnings_and_profits accumulated after the date of liquidation sec_381 based solely on the information submitted and the representations set forth above we rule as follows on liquidation liquidation will be treated as a distribution by sub to distributing in complete_liquidation under sec_332 no gain_or_loss will be recognized by distributing on the receipt of all of the assets and assumption of the liabilities of sub in liquidation sec_332 no gain_or_loss will be recognized by sub on the distribution of its assets and liabilities to distributing in liquidation sec_337 distributing 4’s basis in each asset received from sub in liquidation will equal the basis of such asset in the hands of sub immediately before liquidation sec_334 distributing 4’s holding_period in each asset received from sub in liquidation will include the period during which such asset was held by sub sec_1223 distributing will succeed to and take into account the items of sub described in sec_381 subject_to the conditions and limitations specified in sec_381 sec_382 sec_383 and sec_384 and the regulations thereunder sec_381 and sec_1 a - except to the extent sub 2’s earnings_and_profits are reflected in distributing 4’s earnings_and_profits distributing will succeed to and take into account the earnings_and_profits or deficit in earnings_and_profits of sub as of the date of liquidation sec_381 sec_1_381_c_2_-1 and sec_1_1502-33 any deficit in the earnings_and_profits of sub can be used only to offset earnings_and_profits accumulated after the date of liquidation sec_381 plr-152204-11 based solely on the information submitted and the representations set forth above we rule as follows on contribution distributing will not recognize any gain_or_loss on contribution sec_351 and sec_357 revrul_2003_51 c b controlled will not recognize any gain_or_loss on contribution sec_1032 the basis of each asset received by controlled will be the same as the basis of such asset in the hands of distributing immediately prior to contribution sec_362 the basis of the controlled stock received by distributing in contribution will be the same as the basis of the assets transferred by distributing to controlled decreased by the sum of liabilities assumed by controlled sec_358 and d distributing 4’s holding_period in the controlled stock received in contribution will include the holding_period of the assets transferred in exchange therefor provided that such assets are held by distributing as capital assets on the date of the transfer sec_1223 controlled 2’s holding_period in each asset received in contribution will include the period during which distributing held such asset sec_1223 contribution qualifies for an exception to sec_367 under sec_1_367_a_-3 distributing qualifies for an exception to sec_367 upon entering into a 5-year gain_recognition_agreement pursuant to sec_1_367_a_-8 contribution will be an exchange to which sec_1_367_b_-1 and sec_1_367_b_-4 apply no amount will be included in income as a deemed_dividend equal to the sec_1248 amount under sec_367 as a result of contribution based solely on the information submitted and the representations set forth above we rule as follows on contribution controlled will not recognize any gain_or_loss on contribution sec_351 and sec_357 plr-152204-11 controlled will not recognize any gain_or_loss on contribution sec_1032 the basis of each asset received by controlled will be the same as the basis of such asset in the hands of controlled immediately prior to contribution sec_362 the basis of the controlled stock received by controlled in contribution will be the same as the basis of the assets transferred by controlled to controlled decreased by the sum of liabilities assumed by controlled sec_358 and d controlled 2’s holding_period in the controlled stock received in contribution will include the holding_period of the assets transferred in exchange therefor provided that such assets are held by controlled as capital assets on the date of the transfer sec_1223 controlled 1’s holding_period in each asset received in contribution will include the period during which controlled held such asset sec_1223 contribution will be an exchange to which sec_1_367_b_-1 and sec_1_367_b_-4 apply no amount will be included in income as a deemed_dividend equal to the sec_1248 amount under sec_367 as a result of contribution based solely on the information submitted and the representations set forth above we rule as follows on contribution and distribution contribution followed by distribution will qualify as a reorganization under sec_368 distributing and controlled each will be a_party_to_a_reorganization within the meaning of sec_368 no gain_or_loss will be recognized by distributing on contribution sec_357 and sec_361 and b no gain_or_loss will be recognized by controlled on contribution sec_1032 the basis of each asset received by controlled in contribution will equal the basis of such asset in the hands of distributing immediately before contribution sec_362 plr-152204-11 the holding_period of each asset received by controlled in contribution will include the period during which distributing held such asset sec_1223 no gain_or_loss will be recognized by and no amount otherwise will be included in the income of the shareholders of distributing on their receipt of controlled shares in distribution sec_355 no gain_or_loss will be recognized by distributing as a result of distribution sec_361 the basis of the stock of distributing and controlled in the hands of each shareholder of distributing after distribution will be the same as the basis of the distributing stock held by such shareholder immediately before distribution sec_358 and sec_1_358-1 allocated in proportion to the fair_market_value of the distributing shares and the controlled shares held by such shareholder in accordance with sec_1 a sec_358 and c the holding_period of the controlled shares received by the shareholders of distributing in distribution will include the holding_period of the distributing shares with respect to which distribution will be made provided that such distributing shares are held as capital assets on the date of distribution sec_1223 as provided in sec_312 proper allocation of earnings_and_profits between distributing and controlled will be made under sec_1_312-10 and sec_1_1502-33 distributing shareholders who receive cash in lieu of fractional shares of controlled stock will recognize gain_or_loss measured by the difference between the amount of the cash received and the basis allocated to the fractional share sec_1001 any gain_or_loss will be treated as capital_gain or loss provided such fractional share will be held as a capital_asset on the date of distribution sec_1221 and sec_1222 based solely on the information submitted and the representations set forth above we rule as follows payments made between the distributing group and the controlled group under the distribution agreements that i have plr-152204-11 arisen or will arise for a taxable_period ending on or before distribution or for a taxable_period beginning before and ending after distribution and ii will not have become fixed and ascertainable until after distribution will be treated as if occurring immediately before distribution see 344_us_6 revrul_83_73 c b caveats except as expressly provided herein no opinion is expressed or implied concerning the tax consequences of any aspect of any transaction or item discussed or referenced in this letter in particular this office has not reviewed any information pertaining to and has made no determination regarding the following i ii iii iv v vi whether any of distribution sec_1 through satisfies the business_purpose requirement of sec_1_355-2 whether any of distribution sec_1 through is used principally as a device for the distribution of the earnings_and_profits of any distributing_corporation or controlled_corporation or both see sec_355 and sec_1_355-2 whether any of distribution sec_1 through is part of a plan or series of related transactions pursuant to which one or more persons will acquire directly or indirectly stock representing a 50-percent_or_greater_interest in the distributing_corporation or the controlled_corporation see sec_355 and sec_1_355-7 the federal_income_tax treatment of steps ii - iv vii viii x xiii xvii - xxvi xxviii - xxxi xxxiii and xxxvi to the extent not otherwise specifically ruled upon above the adjustments to earnings_and_profits or deficits in earnings_and_profits if any in any one of the transactions to which sec_367 or b apply and to the extent not otherwise specifically ruled upon above any other consequences under sec_367 with respect to any transaction described in this letter_ruling procedural statements this ruling is directed only to the taxpayer requesting it sec_6110 provides that it may not be used or cited as precedent plr-152204-11 a copy of this ruling letter should be attached to the federal_income_tax return of each taxpayer involved for the taxable_year in which the transaction covered by this ruling letter is consummated alternatively taxpayers filing their returns electronically may satisfy this requirement by attaching a statement to their return that provides the date and control number of the letter_ruling in accordance with the power_of_attorney on file with this office a copy of this letter is being sent to your authorized representative sincerely gerald b fleming senior technician reviewer branch office of associate chief_counsel corporate