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-137376-13 date date legend distributing ----------------------------------------------------------------------- --------------------------------------------------------------------------------- --------------------------------------------------------------------------------------------------------- -------------------------------------------------------------------- ----------- distributing ----------------------------------------------------------------------- ------------------------------------------------------------------------------------------------------------------- --------------------------------------------------------------------------------------------------------- -------------------------------------------------------- distributing ---------------------------------------------------------------------------- -------------------------------------------------------------------- --------------------------------------- distributing ---------------------------------------------------------------------------- -------------------------------------------------------------------- --------------------------------------- controlled --------------------------------------------------------------------------------------------------------- --------------------------------------------------------------------------------------------------- -------------------------------- controlled ----------------------------------------------------------------------------- ---------------------------------------------------------------------------- -------------------------------------------------------------------- -------------------------------------------------- sub -------------------------------- plr-137376-13 ---------------------------------------------------------------------------- -------------------------------------------------------------------- sub ---------------------------------------------------------------------------- -------------------------------------------------------------------- ------------------------- fsub ---------------------------------------------------------------------------------------------------------------- -------------------------------------------------------- -------------------------- fsub ---------------------------------------------------------------------------------------------------------------- -------------------------------------------------------- ------------------------------------------------ fsub ---------------------------------------------------------------------------------------------------------------- -------------------------------------------------------- ------------------------------------------------------ fsub ---------------------------------------------------------- ------------------------------------------------------------------------ ------------------- ----------- fdre ----------- ---------------------------------------------------------------------------- --------------------------------------------------------------------------------------- -------------------------------------------------------------------- ----------------------------------------------------------------------- fdre -------------------------------------- ------------------------------------------------------------- ------------------------------------------------------------- ----------------------- fdre --------------------------------------------------------------------------------------------------------------- ------------------------------------------------------------- ------------------------------------------------------ ------------------------------------------------------------------- ------------------- ----------------------- fdre --------------------------------------------------------------------------------------------------------- ------------------------------------------------------- plr-137376-13 --------------------------------------------------------------------------- fdre --------------------------------------------------------------------------------------------------------------------- -------------------------------------------------------------------- ---------------------------------------------------- dre -------------------------------------------------------------------------------------------- -------------------------------------------------------------------- -------------------------------- dre -------------------------------------------------------------------------------------------- -------------------------------------------------------------------- --------------- merger partner ---------------------------------------------------------------------------- -------------------------------------------------------------------- --------------------------- merger partner sub ---------------------------------------------------------------------------- -------------------------------------------------------------------- ----------------------------------- merger partner shareholder -------------------------------------------------------------------- -------------------------- ----------------------------------------------- merger partner shareholder -------------------------------------------------------------------- ----------------------------------- ----------------------------------------------- holding partnership -------------------------------------------------------------------------------------------- -------------------------------------------------------------------- ----------------------------------------------------------------------- state a state b country a country b country c ------------- ------------ ---------------- ---------------- --------- plr-137376-13 country d business a business b business c business d restructuring ----------- ------------------ -------------------------------- ---------------------------------------------- -------------------------------------- -------------------------------------------- ----------------------------------------------------------------------- ------------------------------------------------------------------------ ------------------------------------------------------------------------ ------------------------------------------------------------------------ ------------------------------------------------------------------------ ------------------------------------------------------------------------ --------------------------------- gra --------------------------------------------------------------------------------------------------------------- ----------------------------------------------------------------------- ------------------------------------------------------------------------ ------------------------------------------------------------------------ ------------------------------------------------------------------------ ---------------------------------------------------------- aa bb cc dd ee ff ----------- ------ ---- --- --- --- ----------------------------------------------------------------------- ----------------------------------------------------------------- -------------------------------------------------------- ---------------- gg ----- plr-137376-13 hh ii jj kk additional payment_date date date date date year ----- --- ---- --- ----------------------------------------------------------- ------------------------------------------------------------------------ ------------------------------------------------------------------------ ------------------------------------------------------------------------ ------------------------------------------------------------------------ ------------------------------------------------------------------------ ------------------------------------------------------------------------ ------------------------------------------------- ------------------------ ---------------- ----------------------- ----------------------- -------------------------------------------- ------ dear -------------------- this letter responds to your letter dated date requesting rulings on certain federal_income_tax consequences of the proposed transactions defined below the information provided in that letter and in later correspondence is summarized below the rulings contained in this letter are based upon facts and representations submitted by the taxpayer and accompanied by penalty of perjury statements executed by an appropriate party this office has not verified any of the materials submitted in support of the request for rulings verification of the information representations and other data may be required as part of the audit process in particular this office has not reviewed any information pertaining to and has made no determination regarding whether any of the proposed transactions i satisfies the business_purpose plr-137376-13 requirement of sec_1_355-2 ii is used principally as a device for the distribution of the earnings_and_profits of a distributing_corporation or controlled_corporation or both see sec_355 of the internal_revenue_code 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 any distributing_corporation or controlled_corporation see sec_355 and sec_1_355-7 summary of facts distributing a state a corporation has a single class of common_stock outstanding that is widely held and publicly traded distributing is the parent of a worldwide group that includes both domestic and foreign entities the distributing worldwide group and is also the common parent of an affiliated_group_of_corporations that files a consolidated u s federal_income_tax return the distributing consolidated_group the distributing worldwide group conducts multiple lines of business including business a business b business c and business d distributing intends to separate business a from its other business lines including business b business c and business d collectively the retained businesses through a series of transactions described below distributing wholly owns distributing sub and sub each a state b corporation and a member of the distributing consolidated_group sub was acquired by distributing in year the sub acquisition distributing wholly owns distributing a country a entity classified as a corporation for u s federal_income_tax purposes distributing wholly owns distributing a country a entity classified as a corporation for u s federal_income_tax purposes distributing and distributing are controlled_foreign_corporations within the meaning of sec_957 in year after the sub acquisition in order to integrate sub 2’s retained businesses with distributing 4’s and distributing 1’s retained businesses distributing undertook the restructuring distributing wholly owns fdre a country b entity and fdre a country a entity each of which is disregarded as separate from distributing for u s federal_income_tax purposes fdre owns aa percent of the equity interests in fdre a country c entity that is disregarded from distributing for u s federal_income_tax purposes the remaining bb percent of fdre is held by distributing as a nominee for fdre each of fsub fsub and fsub collectively the business a fsubs is a plr-137376-13 country c entity classified as a corporation for u s federal_income_tax purposes fdre holds an equity_interest as a nominee for fdre in each of the business a fsubs and fdre owns all the remaining equity interests in each of the business a fsubs fdre also wholly owns fsub a country c entity classified as a corporation for u s federal_income_tax purposes each of fsub fsub fsub and fsub is a controlled_foreign_corporation within the meaning of sec_957 distributing directly conducts business a in country d and indirectly conducts business a outside of country d primarily in country c distributing also directly conducts the retained businesses in country d and indirectly through various subsidiaries outside of country d each of distributing distributing and distributing is a holding_company that indirectly conducts business a in country c and certain of the retained businesses in country c distributing also indirectly conducts retained businesses in other countries fdre directly engages in business a and certain of the retained businesses in country b fdre also directly conducts business a in other countries the business a fsubs directly engage in business a in country c fsub directly engages in certain of the retained businesses in country c holding partnership a state b limited_liability_company classified as a partnership for u s federal_income_tax purposes owns all of the outstanding_stock in merger partner a state b corporation that is unrelated to the distributing worldwide group merger partner is a holding_company and is the parent of a worldwide group that includes both domestic and foreign entities the merger partner worldwide group and is also the common parent of an affiliated_group that files a consolidated u s federal_income_tax return the merger partner consolidated_group merger partner owns all of the outstanding_stock of merger partner sub a state b corporation on date merger partner shareholder affiliates of merger partner shareholder and all other individuals owning stock in merger partner transferred all of the stock in merger partner to newly formed holding partnership distributing plans to undertake the proposed transactions to facilitate the strategic combination of distributing 4’s business a operations with the business operations of merger partner which is intended to leverage synergies permit geographic expansion of the combined business a and result in considerable operational and administrative cost savings proposed transactions distributing proposes to undertake or has already undertaken the following steps collectively the proposed transactions internal distributions plr-137376-13 i ii iii iv v vi fdre will form controlled a country a entity that will be classified as a corporation for u s federal_income_tax purposes fdre will form fdre a country a entity that will be disregarded as separate from distributing for u s federal_income_tax purposes with a nominal amount of money the nominal cash fdre will acquire the shares of each of the business a fsubs held by fdre the nominal shares in exchange for the nominal cash and will hold the nominal shares on behalf of controlled fdre will contribute to controlled all of its interests in fdre and the outstanding_stock of the business a fsubs in exchange for stock of controlled fdre will transfer the stock of controlled to distributing in exchange for cash in connection with the proposed transactions distributing formed fdre a country b entity disregarded as separate from distributing for u s federal_income_tax purposes with cash fdre used the cash to purchase the country b non-business a assets from fdre vii distributing will transfer all of its interests in fdre to controlled 1in exchange for stock of controlled together with step iv the controlled contribution viii distributing will distribute all the stock of controlled to distributing alternatively distributing may form a country a entity that will be disregarded as separate from distributing for u s federal_income_tax purposes fdre and if so distributing will transfer the stock of distributing to fdre distributing will distribute all the stock of controlled to fdre and fdre will distribute all the stock of controlled to distributing the first internal distribution ix x distributing will distribute all the stock of controlled to distributing the second internal distribution distributing will distribute all the stock of controlled to distributing the third internal distribution and together with the first internal distribution and the second internal distribution the internal distributions external distribution and combination plr-137376-13 xi distributing a formed controlled a state b corporation and two new limited_liability companies in state b and state a respectively dre and dre each of which is disregarded as separate from distributing for u s federal_income_tax purposes b will contribute certain country d business a assets to dre and c will contribute all the stock of controlled all of the stock of sub and the remaining country d business a assets to dre xii distributing will a contribute all of its interests in dre to dre and b contribute all of its interests in dre to controlled xiii dre will borrow from one or more unrelated third party lenders under a debt facility the debt facility and will distribute cash to dre which will then distribute the cash to controlled the debt facility may exceed the base cash payment to be made to distributing in step xiv with the excess_proceeds to be used to repay existing debt owed by merger partner after the combination in step xvii or for general corporate purposes xiv in exchange for the transfer of dre in step xii controlled will a issue stock of controlled to distributing b assume or be treated for u s federal_income_tax purposes as assuming liabilities associated with business a in country d c distribute cash in the amount of dollar_figureff the base cash payment and d agree to make the additional payment together with the base cash payment the cash distribution with step xii the controlled contribution the additional payment is a contractual right is not represented by any form of certificate or instrument conveys no voting liquidation or preemptive rights is non- interest bearing and is non-transferrable during the kk month period following the external distribution and pursuant to the plan_of_reorganization distributing will expend cash in the amount of the base cash payment to make distributions to its shareholders which distributions could include regular quarterly dividends to its shareholders repurchase its outstanding common_stock which repurchases could be made pursuant to its existing or amended stock repurchase plans pay its creditors which payments could include certain long-term indebtedness previously incurred by distributing including interest and associated fees such as consent fees as well as principal and ordinary course liabilities whenever incurred or a combination of through the aggregate amount of the cash used pursuant to through will not be less than the amount of the base cash payment plr-137376-13 pursuant to a declaration by distributing 4’s board_of directors on date and pursuant to the plan_of_reorganization distributing will within gg months following its receipt if any of the additional payment use an amount of cash equal to the additional payment to repay creditors to whom distributing had existing debt obligations at the time of the external distribution distributing will establish a separate bank account to deposit any additional payment received xv distributing will distribute on a pro_rata basis the stock of controlled to distributing 4’s shareholders the external distribution and together with the internal distributions the distributions distributing 4’s shareholders that otherwise would be entitled to receive fractional shares will receive cash in lieu thereof fractional share interests will be aggregated an exchange agent will sell shares encompassing such interests in the open market and distribute the proceeds to distributing 4’s shareholders otherwise entitled to such interests if taken into account for purposes of sec_355 the sale of fractional shares could cause the external distribution to be treated as a distribution to which sec_355 applies and this fact has been specifically considered in issuing ruling xvi following the external distribution and pursuant to a merger agreement entered into prior to the external distribution merger partner will merge with and into controlled the combination in exchange for its merger partner shares holding partnership will a receive shares of controlled representing cc less than percent of the stock of controlled b enter into a tax receivables agreement tra pursuant to which holding partnership will be entitled to a payment equal to ee percent of the net tax savings that result from controlled 2’s use of merger partner worldwide group’s net operating losses in a taxable_year or portion thereof beginning after the closing date and c if the working_capital net debt or transaction expenses of merger partner differs from agreed-upon amounts receive a payment of cash from controlled the combination consideration immediately after the combination distributing 4’s shareholders will own dd percent and holding partnership will own cc percent of the stock of controlled xvii following the combination dre will merge with and into merger partner sub with merger partner sub surviving the merger the merger partner sub contribution subsequently merger partner sub will repay certain of plr-137376-13 its existing creditors with the proceeds of borrowing under the debt facility to which merger partner sub will be added as a co-borrower in connection with the proposed transactions the parties to the proposed transactions entered into various agreements on date distributing and controlled and certain other parties have entered or will enter into a tax_matters_agreement a contribution and distribution agreement and an employee matters agreement in addition controlled will enter into lease agreements with distributing a supply agreement with distributing and a transition services agreement with distributing all agreements except for the lease agreements and the supply agreement are the related arrangements the initial board_of directors of controlled as of the time of the external distribution will consist of hh directors distributing will designate controlled 2’s initial chief_executive_officer who will also be chairman of the board distributing and merger partner will jointly designate ii of the directors merger partner will appoint the remaining directors one of whom is currently an employee of merger partner and one of whom is an employee of merger partner shareholder together the merger partner employee directors all members of controlled 2’s board will be required to stand for election in the normal course following the combination for jj years to compensate the directors for their service on the board the directors will receive cash payments at least some amount of which will be tied to the value of the stock of controlled but will not receive stock or rights to stock in controlled in their capacity as members of the board if taken into account for purposes of sec_355 the initial board_of directors appointments could cause the external distribution to be treated as a distribution to which sec_355 applies and this fact has been specifically considered in issuing ruling distributing has granted equity-based awards under various stock-based compensation plans to officers and employees of the distributing worldwide group distributing has various types of share-based compensation arrangements including stock_options restricted_stock restricted_stock units and a performance_share_plan pursuant to which an employee is granted units that are paid in distributing equity at specified periods employees of distributing who become employees of controlled will receive their benefits under the distributing plans attributable to the period during which they were employees of distributing equity-based incentive compensation plans are expected to be adopted for management of controlled after the proposed transactions the controlled post-distribution compensatory plans if the participants in the controlled post-distribution compensatory plans are treated as part of a coordinating group under sec_1_355-7 and any issuances of controlled stock pursuant to the plan are taken into account for purposes of sec_355 such issuances could cause the external distribution to be treated as a distribution to which sec_355 applies and these facts have been specifically considered in issuing ruling plr-137376-13 distributing also sponsors and maintains a defined contribution pension_plan that is qualified under sec_401 that includes cash or deferred arrangements under sec_401 and a related trust qualified under sec_501 collectively the distributing sec_401 plan participants in the distributing sec_401 plan include distributing employees who will be transferred to controlled as part of the proposed transactions one of the investment alternatives available under the distributing sec_401 plan is a distributing common_stock fund the distributing stock fund as a result of the proposed transactions distributing will distribute shares of controlled stock to the distributing stock fund under the terms of the distributing sec_401 plan the controlled stock is not a permitted_investment alternative therefore the trustee of the distributing sec_401 plan will sell all of the shares of controlled stock that will be distributed to the distributing stock fund in the external distribution in one or more orderly open market sales within ii months following the proposed transactions the cash received from those sales will likely be reinvested in distributing stock but plan participants would be able to direct such funds into other investment options available under the distributing sec_401 plan if the aggregation rule_of sec_355 were to apply for purposes of determining whether the distributing stock fund with respect to any sales of controlled stock it makes actively participates in the management operation of any corporation for purposes of the definition of controlling shareholder within the meaning of sec_1_355-7 such sales could cause the external distribution to be treated as a distribution to which sec_355 applies if those sales were regarded as part of a plan including the external distribution and this fact has been specifically considered in issuing ruling the controlled contribution and the first internal distribution representations 1a no part of the consideration to be distributed in the first internal distribution will be received by any shareholder of distributing as a creditor employee or in any capacity other than that of a shareholder of distributing 1b 1c in applying sec_355 regarding the active_conduct_of_a_trade_or_business distributing will treat all members of its separate_affiliated_group the distributing sag as defined in sec_355 as one corporation the five years of financial information submitted on behalf of the retained businesses in country c conducted by the distributing sag is representative of its present business operations and with regard to such businesses there have been no substantial operational changes since the plr-137376-13 date of the last financial statements submitted 1d in applying sec_355 regarding the active_conduct_of_a_trade_or_business controlled will treat all members of its separate_affiliated_group the controlled sag as defined in sec_355 as one corporation 1e the five years of financial information submitted on behalf of business a in country c currently conducted by the distributing sag is representative of its present business operations and with regard to such business there have been no substantial operational changes since the date of the last financial statements submitted 1f 1g the distributing sag will have neither acquired_business a in country c nor except in the restructuring acquired control of an entity conducting business a in country c during the five-year period ending on the date of the first internal 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 distributing sag will have neither acquired the retained businesses in country c nor except in the restructuring acquired control of an entity conducting the retained businesses in country c during the five-year period ending on the date of the first internal 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 1h following the first internal distribution the distributing sag will continue the active_conduct of the retained businesses in country c and the controlled sag will continue the active_conduct of business a in country c independently and with their separate employees except as otherwise provided pursuant to the related arrangements 1i 1j the first internal distribution will be carried out for the corporate business_purpose of facilitating the external distribution the first internal distribution is motivated in whole or substantial part by this corporate business_purpose the first internal distribution will not be used principally as a device for the distribution of the earnings_and_profits of distributing or controlled or both 1k there is no plan or intention to liquidate distributing or controlled to merge distributing or controlled or to sell or otherwise dispose_of the plr-137376-13 assets of distributing or controlled except in the ordinary course of business after the first internal distribution except to integrate business a in country c with merger partner’s business or pursuant to the proposed transactions 1l other than pursuant to the proposed transactions there is no plan or intention by distributing or controlled or any party related to distributing or controlled to purchase or acquire any of the outstanding_stock of distributing or controlled after the first internal distribution 1m for purposes of sec_355 immediately after the first internal distribution no person determined after applying 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 the first internal distribution 1n for purposes of sec_355 immediately after the first internal distribution no person determined after applying 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 the first internal distribution or ii attributable to distributions on distributing stock_or_securities that were acquired by purchase as defined in sec_355 and during the five-year period determined after applying sec_355 ending on the date of the first internal distribution 1o treating i the aggregation rule_of sec_355 as not applying for purposes of determining whether the distributing sec_401 plan actively participates in the management or operation of any corporation for purposes of the definition of controlling shareholder within the meaning of sec_1_355-7 and ii the initial composition of controlled 2’s board_of directors the sale of fractional shares and the exercise or fulfillment of any distributing compensatory arrangement or controlled compensatory post-distribution compensation plans as not resulting in any acquisitions for purposes of sec_355 the external 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 plr-137376-13 will acquire directly or indirectly stock representing a percent or greater interest within the meaning of sec_355 in distributing or controlled including any predecessor or successor of any corporation the determination of whether a person is a five-percent shareholder or ten-percent shareholder is made solely by reference to the filings and actual knowledge for purposes of this letter a the filings are the latest schedules 13d or 13g filed with respect to the issuing company with the u s securities_and_exchange_commission on or prior to the date of the particular sale or disposition with respect to which it is being determined whether the seller or acquirer is a five-percent shareholder or ten-percent shareholder within the meaning of sec_1 h and and b actual knowledge is with respect to any particular sale or disposition limited to actual knowledge of i those persons whose ownership of stock and or options is listed in a form_3 or 10-k filed by the issuing company with the u s securities_and_exchange_commission and ii with respect to the persons listed in i the ownership of such stock or options listed in the latest relevant form_3 or 10-k made on or prior to the date of such sale or disposition immediately after the first internal distribution taking into account sec_355 neither distributing nor controlled will be a disqualified_investment_corporation within the meaning of sec_355 the total fair_market_value of the assets transferred by distributing to controlled in the controlled contribution will exceed the sum of i the total amount of liabilities if any assumed within the meaning of sec_357 by controlled in the exchange ii the amount of liabilities if any owed by distributing to controlled that are discharged or extinguished in the exchange and iii the amount of cash and the fair_market_value of any other_property if any other than stock and securities permitted to be received under sec_361 without the recognition of gain to be received by distributing from controlled in the exchange the fair_market_value of the assets of controlled will exceed the amount of its liabilities immediately_after_the_exchange the aggregate adjusted_basis and the aggregate fair_market_value of the assets to be transferred to controlled by distributing in the controlled contribution will each equal or exceed the sum of i the liabilities assumed as determined under sec_357 by controlled plus any liabilities to which the transferred assets are subject and ii the fair_market_value of any other_property within the meaning of sec_361 and the amount of money transferred by controlled to distributing in the exchange 1p 1q 1r plr-137376-13 1s 1t the total fair_market_value of the assets transferred to controlled in the controlled contribution will equal or exceed the aggregate adjusted_basis of the assets transferred the liabilities if any that will be assumed within the meaning of sec_357 by controlled and the liabilities if any to which the transferred assets are subject will have been incurred in the ordinary course of business and will be associated with the assets being transferred 1u except pursuant to the elimination or reduction of intercompany balances in connection with the proposed transactions distributing will have neither accumulated its receivables nor made extraordinary payment of its payables in anticipation of the first internal distribution 1v except for indebtedness that may be created in the ordinary course of business or in connection with the related arrangements no indebtedness will exist between distributing and controlled at the time of or subsequent to the first internal distribution 1w except with respect to certain payments made pursuant to the related arrangements payments made in connection with continuing transactions 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 1x any indebtedness owed by controlled to distributing after the controlled contribution and the first internal distribution will not constitute stock_or_securities 1y no two parties to the first internal distribution will be investment companies as defined in sec_368 and iv 1z distributing and controlled and their respective shareholders will each pay their own expenses if any incurred in connection with the first internal distribution 1aa no party to the controlled contribution or the first internal distribution is under the jurisdiction of a court in a title_11_or_similar_case within the meaning of sec_368 1bb immediately before and after the first internal distribution distributing and controlled will each be a controlled_foreign_corporation within the meaning of sec_957 with respect to which distributing will be a sec_1248 shareholder within the meaning of sec_1 b - plr-137376-13 b 1cc the notice requirements of sec_1_367_b_-1 will be satisfied for the controlled contribution and the first internal distribution 1dd distributing will not transfer any united_states real_property interests as defined in sec_1_897-1 during the controlled contribution 1ee at all times before and immediately after the controlled contribution and the first internal distribution neither distributing nor controlled has been or will be a passive_foreign_investment_company pfic as defined in sec_1297 1ff the controlled contribution and the first internal distribution will not include an exchange described in sec_1_367_b_-4 sec_1_367_b_-4 or sec_1_367_b_-4 1gg with respect to gra previously entered into by distributing as parent of the distributing consolidated_group in connection with a prior transfer of stock_or_securities distributing will to the extent required under sec_1_367_a_-8 and sec_1_367_a_-8 enter into a new gain_recognition_agreement gra i identifying all triggering events and exceptions thereto resulting from the proposed transactions ii designating a successor transferor_corporation transferee corporation and or transferred corporation as applicable and iii complying with all other requirements for gras under sec_1_367_a_-8 the new gra additionally distributing will comply with the notification requirements of sec_1_367_a_-8 with respect to the new gra the second internal distribution 2a no part of the consideration to be distributed in the second internal distribution will be received by any shareholder of distributing as a creditor employee or in any capacity other than that of a shareholder of distributing 2b 2c in applying sec_355 regarding the active_conduct_of_a_trade_or_business distributing will treat all members of its separate_affiliated_group the distributing sag as defined in sec_355 as one corporation the five years of financial information submitted on behalf of the retained businesses in country c conducted by the distributing sag is representative of its present business operations and with regard to such plr-137376-13 business there have been no substantial operational changes since the date of the last financial statements submitted 2d in applying sec_355 regarding the active_conduct_of_a_trade_or_business controlled will treat all members of its separate_affiliated_group ie the controlled sag as defined in sec_355 as one corporation 2e the five years of financial information submitted on behalf of business a in country c currently conducted by the distributing sag is representative of its present business operations and with regard to such business there have been no substantial operational changes since the date of the last financial statements submitted 2f 2g the distributing sag will have neither acquired the retained businesses in country c nor except in the restructuring acquired control of an entity conducting the retained businesses in country c during the five-year period ending on the date of the second internal 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 distributing sag will have neither acquired_business a in country c nor except in the restructuring acquired control of an entity conducting business a in country c during the five-year period ending on the date of the second internal 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 2h following the second internal distribution the distributing sag will continue the active_conduct of the retained businesses in country c and the controlled sag will continue the active_conduct of business a in country c independently and with their separate employees except as otherwise provided pursuant to the related arrangements 2i 2j the second internal distribution will be carried out for the corporate business_purpose of facilitating the external distribution the second internal distribution is motivated in whole or substantial part by this corporate business_purpose the second internal distribution will not be used principally as a device for the distribution of the earnings_and_profits of distributing or controlled or both 2k there is no plan or intention to liquidate distributing or controlled to plr-137376-13 merge distributing or controlled or to sell or otherwise dispose_of the assets of distributing or controlled except in the ordinary course of business after the second internal distribution except to integrate business a in country c with merger partner’s business or pursuant to the proposed transactions 2l other than pursuant to the proposed transactions there is no plan or intention by distributing or controlled or any party related to distributing or controlled to purchase or acquire any of the outstanding_stock of distributing or controlled after the second internal distribution 2m for purposes of sec_355 immediately after the second internal distribution no person determined after applying 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 the 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 the second internal distribution 2n for purposes of sec_355 immediately after the second internal distribution no person determined after applying 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 the 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 the second internal 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 the second internal distribution 2o treating i the aggregation rule_of sec_355 as not applying for purposes of determining whether the distributing sec_401 plan actively participates in the management or operation of any corporation for purposes of the definition of controlling shareholder within the meaning of sec_1_355-7 and ii the initial composition of controlled 2’s board_of directors the sale of fractional shares and the exercise or fulfillment of any distributing compensatory arrangement or controlled compensatory post-distribution compensation plans as not resulting in any acquisitions for purposes of sec_355 the external distribution is not part of a plan or series of related transactions within the plr-137376-13 meaning of sec_1_355-7 pursuant to which one or more persons will acquire directly or indirectly stock representing a percent or greater interest within the meaning of sec_355 in distributing or controlled including any predecessor or successor of any such corporation the determination of whether a person is a five-percent shareholder or ten-percent shareholder is made solely by reference to the filings and actual knowledge for purposes of this letter a the filings are the latest schedules 13d or 13g filed with respect to the issuing company with the u s securities_and_exchange_commission on or prior to the date of the particular sale or disposition with respect to which it is being determined whether the seller or acquirer is a five- percent shareholder or ten-percent shareholder within the meaning of sec_1_355-7 and and b actual knowledge is with respect to any particular sale or disposition limited to actual knowledge of i those persons whose ownership of stock and or options is listed in a form_3 or 10-k filed by the issuing company with the u s securities_and_exchange_commission and ii with respect to the persons listed in i the ownership of such stock or options listed in the latest relevant form_3 or 10-k made on or prior to the date of such sale or disposition 2p immediately after the second internal distribution taking into account sec_355 neither distributing nor controlled will be a disqualified_investment_corporation within the meaning of sec_355 2q except pursuant to the elimination or reduction of intercompany balances in connection with the proposed transactions distributing will have neither accumulated its receivables nor made extraordinary payment of its payables in anticipation of the second internal distribution 2r except for indebtedness that may be created in the ordinary course of business or in connection with the related arrangements no indebtedness will exist between distributing and controlled at the time of or subsequent to the second internal distribution 2s except with respect to certain payments made pursuant to the related arrangements payments made in connection with continuing transactions 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 2t any indebtedness owed by controlled to distributing after the second internal distribution will not constitute stock_or_securities plr-137376-13 2u no two parties to the second internal distribution will be investment companies as defined in sec_368 and iv 2v distributing and controlled and their respective shareholders will each pay their own expenses if any incurred in connection with the second internal distribution 2w immediately before and after the second internal distribution distributing and controlled will each be a controlled_foreign_corporation within the meaning of sec_957 with respect to which distributing will be a sec_1248 shareholder within the meaning of sec_1 b - b 2x the notice requirements of sec_1_367_b_-1 will be satisfied for the second internal distribution 2y at all times before and immediately after the second internal distribution neither distributing nor controlled has been or will be a passive_foreign_investment_company pfic as defined in sec_1297 the third internal distribution 3a no part of the consideration to be distributed in the third internal distribution will be received by any shareholder of distributing as a creditor employee or in any capacity other than that of a shareholder of distributing 3b 3c 3d in applying sec_355 regarding the active_conduct_of_a_trade_or_business distributing will treat all members of its separate_affiliated_group the distributing sag as defined in sec_355 as one corporation the five years of financial information submitted on behalf of the retained businesses in country c conducted by the distributing sag is representative of its present business operations and with regard to such business there has been no substantial operational changes since the date of the last financial statements submitted in applying sec_355 regarding the active_conduct_of_a_trade_or_business controlled will treat all members of its separate_affiliated_group ie the controlled sag as defined in sec_355 as one corporation 3e the five years of financial information submitted on behalf of business a plr-137376-13 in country c currently conducted by the distributing sag is representative of its present business operations and with regard to such business there has been no substantial operational changes since the date of the last financial statements submitted 3f 3g the distributing sag will have neither acquired the retained businesses in country c nor except in the restructuring acquired control of an entity conducting the retained businesses in country c during the five-year period ending on the date of the third internal 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 distributing sag will have neither acquired_business a in country c nor except in the restructuring acquired control of an entity conducting business a in country c during the five-year period ending on the date of the third internal 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 3h following the third internal distribution the distributing sag will continue the active_conduct of the retained businesses in country c and the controlled sag will continue the active_conduct of business a in country c independently and with their separate employees except as otherwise provided pursuant to the related arrangements 3i 3j 3k the third internal distribution will be carried out for the corporate business_purpose of facilitating the external distribution the third internal distribution is motivated in whole or substantial part by this corporate business_purpose the third internal distribution will not be used principally as a device for the distribution of the earnings_and_profits of distributing or controlled or both there is no plan or intention to liquidate distributing or controlled to merge distributing or controlled or to sell or otherwise dispose_of the assets of distributing or controlled except in the ordinary course of business after the third internal distribution except to integrate business a in country c with merger partner’s business or pursuant to the proposed transactions 3l other than pursuant to the proposed transactions there is no plan or intention by distributing or controlled or any party related to distributing or controlled to purchase or acquire any of the plr-137376-13 outstanding_stock of distributing or controlled after the third internal distribution 3m for purposes of sec_355 immediately after the third internal distribution no person determined after applying 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 the 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 the third internal distribution 3n for purposes of sec_355 immediately after the third internal distribution no person determined after applying 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 the third internal 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 the third internal distribution 3o treating i the aggregation rule_of sec_355 as not applying for purposes of determining whether the distributing sec_401 plan actively participates in the management or operation of any corporation for purposes of the definition of controlling shareholder within the meaning of sec_1_355-7 and ii the initial composition of controlled 2’s board_of directors the sale of fractional shares and the exercise or fulfillment of any distributing compensatory arrangement or controlled compensatory post-distribution compensation plans as not resulting in any acquisitions for purposes of sec_355 the external 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 distributing or controlled including any predecessor or successor of any such corporation the determination of whether a person is a five-percent shareholder or ten-percent shareholder is made solely by reference to the filings and actual knowledge for purposes of this letter a the filings are the latest schedules 13d or 13g filed with respect to the issuing company with the u s securities_and_exchange_commission on plr-137376-13 or prior to the date of the particular sale or disposition with respect to which it is being determined whether the seller or acquirer is a five- percent shareholder or ten-percent shareholder within the meaning of sec_1_355-7 and and b actual knowledge is with respect to any particular sale or disposition limited to actual knowledge of i those persons whose ownership of stock and or options is listed in a form_3 or 10-k filed by the issuing company with the u s securities_and_exchange_commission and ii with respect to the persons listed in i the ownership of such stock or options listed in the latest relevant form_3 or 10-k made on or prior to the date of such sale or disposition 3p immediately after the third internal distribution taking into account sec_355 neither distributing nor controlled will be a disqualified_investment_corporation within the meaning of sec_355 3q except pursuant to the elimination or reduction of intercompany balances in connection with the proposed transactions distributing will have neither accumulated its receivables nor made extraordinary payment of its payables in anticipation of the third internal distribution 3r except for indebtedness that may be created in the ordinary course of business or in connection with the related arrangements no indebtedness will exist between distributing and controlled at the time of or subsequent to the third internal distribution 3s except with respect to certain payments made pursuant to the related arrangements payments made in connection with continuing transactions 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 3t any indebtedness owed by controlled to distributing after the third internal distribution will not constitute stock_or_securities 3u no two parties to the third internal distribution will be investment companies as defined in sec_368 and iv 3v distributing and controlled and their respective shareholders will each pay their own expenses if any incurred in connection with the third internal distribution 3w immediately before the third internal distribution controlled will be a controlled_foreign_corporation within the meaning of sec_957 with plr-137376-13 respect to which distributing will be a sec_1248 shareholder within the meaning of sec_1_367_b_-2 3x distributing will be a sec_1248 shareholder as defined in reg sec_1_1248_f_-1 with respect to controlled immediately after the third internal distribution sec_1_1248_f_-2 3y 3z the third internal distribution will be an existing stock_distribution as defined in sec_1_1248_f_-1 to which distributing and distributing will elect to apply the provisions of sec_1 f - b in accordance with sec_1_1248_f_-2 immediately after the third internal distribution distributing will for purposes of sec_1248 and in accordance with reg sec_1_1248_f_-2 adjust its holding_period in each share of stock of controlled received in the third internal distribution such that distributing 4’s holding_period in each share is equal to distributing 3’s holding_period in the share at the time of the third internal distribution distributing will in accordance with sec_1_1248_f_-2 reduce its sec_358 basis as defined in sec_1_1248_f_-1 in each share of stock of controlled received in the third internal distribution to the extent that distributing 3’s sec_1248 amount as defined in sec_1_1248_f_-1 with respect to the share exceeds distributing 4’s postdistribution amount as defined in sec_1_1248_f_-1 with respect to the share 3aa immediately before the third internal distribution items of income gain loss deduction and credit will be taken into account as required by the applicable intercompany_transaction regulations see sec_1_1502-13 and sec_1 as in effect before the publication of t d 1995_2_cb_147 and as currently in effect sec_1_1502-13 as published by t d the controlled contribution and the external distribution 4a any indebtedness owed by controlled to distributing after the controlled contribution and the external distribution will not constitute stock_or_securities 4b no part of the consideration to be distributed in the external distribution will be received by any shareholder of distributing as a creditor employee or in any capacity other than that of a shareholder of distributing plr-137376-13 4c in applying sec_355 regarding the active_conduct_of_a_trade_or_business distributing will treat all members of its separate_affiliated_group the distributing sag as defined in sec_355 as one corporation 4d the five years of financial information submitted on behalf of the retained businesses conducted by the distributing sag is representative of their present business operations and with regard to such businesses there have been no substantial operational changes since the date of the last financial statements submitted 4e 4f 4g in applying sec_355 regarding the active_conduct_of_a_trade_or_business controlled will treat all members of its separate_affiliated_group the controlled sag as defined in sec_355 as one corporation the five years of financial information submitted on behalf of business a currently conducted by the distributing sag is representative of its present business operations and with regard to such business there has been no substantial operational changes since the date of the last financial statements submitted the distributing sag will have neither acquired the retained businesses nor except for the acquisition of sub acquired control of an entity conducting the retained businesses during the five-year period ending on the date of the external 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 4h the distributing sag will have neither acquired_business a nor acquired control of an entity conducting business a during the five-year period ending on the date of the external 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 4i 4j following the external distribution the distributing sag will continue the active_conduct of the retained businesses and the controlled sag including merger partner sub will continue the active_conduct of business a independently and with their separate employees except as otherwise provided pursuant to the related arrangements the external distribution will be carried out to facilitate the strategic combination of distributing 4’s business a with the business of merger partner the external distribution is motivated in whole or substantial plr-137376-13 part by this corporate business_purpose 4k 4l the external distribution will not be used principally as a device for the distribution of the earnings_and_profits of distributing or controlled or both there is no plan or intention to liquidate distributing or controlled to merge distributing or controlled or to sell or otherwise dispose_of the assets of distributing or controlled except in the ordinary course of business after the external distribution except to integrate business a with merger partner’s business or pursuant to the proposed transactions 4m other than pursuant to the proposed transactions there is no plan or intention by distributing or controlled or any party related to distributing or controlled to purchase or acquire any of the outstanding_stock of distributing or controlled after the external distribution 4n the payment of cash in lieu of fractional shares of controlled stock is solely for the purpose of avoiding the expense and inconvenience of issuing fractional shares and does not represent separately bargained-for consideration no distributing shareholder will receive cash in an amount equal to or greater than the value of one full share of controlled common_stock 4o for purposes of sec_355 immediately after the external distribution no person determined after applying 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 the external distribution 4p for purposes of sec_355 immediately after the external distribution no person determined after applying 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 the external 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 plr-137376-13 4q sec_355 ending on the date of the external distribution treating i the aggregation rule_of sec_355 as not applying for purposes of determining whether the distributing sec_401 plan actively participates in the management or operation of any corporation for purposes of the definition of controlling shareholder within the meaning of sec_1_355-7 and ii the initial composition of controlled 2’s board_of directors the sale of fractional shares and the exercise or fulfillment of any distributing compensatory arrangement or controlled compensatory post-distribution compensation plans as not resulting in any acquisitions for purposes of sec_355 the external 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 percent or greater interest within the meaning of sec_355 in distributing or controlled including any predecessor or successor of any such corporation the determination of whether a person is a five-percent shareholder or ten-percent shareholder is made solely by reference to the filings and actual knowledge for purposes of this letter a the filings are the latest schedules 13d or 13g filed with respect to the issuing company with the u s securities_and_exchange_commission on or prior to the date of the particular sale or disposition with respect to which it is being determined whether the seller or acquirer is a five- percent shareholder or ten-percent shareholder within the meaning of sec_1_355-7 and and b actual knowledge is with respect to any particular sale or disposition limited to actual knowledge of i those persons whose ownership of stock and or options is listed in a form_3 or 10-k filed by the issuing company with the u s securities_and_exchange_commission and ii with respect to the persons listed in i the ownership of such stock or options listed in the latest relevant form_3 or 10-k made on or prior to the date of such sale or disposition 4r 4s immediately after the external distribution taking into account sec_355 neither distributing nor controlled will be a disqualified_investment_corporation within the meaning of sec_355 the total fair_market_value of the assets to be transferred by distributing to controlled in the controlled contribution will exceed the sum of i the total amount of liabilities if any assumed within the meaning of sec_357 by controlled in the exchange ii the amount of liabilities if any owed by distributing to controlled that will be discharged or extinguished in the exchange and iii the amount of cash and the fair_market_value of any other_property if any other than stock and securities permitted to be received under sec_361 without the plr-137376-13 recognition of gain to be received by distributing from controlled in the exchange the fair_market_value of the assets of controlled will exceed the amount of its liabilities immediately_after_the_exchange 4t the aggregate adjusted_basis and the aggregate fair_market_value of the assets to be transferred by distributing to controlled in the controlled contribution will each equal or exceed the sum of i the liabilities assumed as determined under sec_357 by controlled plus any liabilities to which the transferred assets are subject and ii the fair_market_value of any other_property within the meaning of sec_361 and the amount of any money transferred by controlled to distributing 4u the total fair_market_value of the assets transferred to controlled in the controlled contribution will equal or exceed the aggregate adjusted_basis of the assets transferred 4v the liabilities if any that will be assumed within the meaning of sec_357 by controlled and the liabilities if any to which the transferred assets are subject will have been incurred in the ordinary course of business and will be associated with the assets being transferred 4w except pursuant to the elimination or reduction of intercompany balances in connection with the proposed transactions distributing will have neither accumulated its receivables nor made extraordinary payment of its payables in anticipation of the external distribution 4x except for indebtedness that may be created in the ordinary course of business or in connection with the related arrangements no indebtedness will exist between distributing and controlled at the time of or subsequent to the external distribution 4y except with respect to certain payments made pursuant to the related arrangements payments made in connection with continuing transactions 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 4z no two parties to the controlled contribution will be investment companies as defined in sec_368 and iv 4aa distributing and controlled and their respective shareholders will each pay their own expenses if any incurred in connection with the external distribution plr-137376-13 4bb immediately before the external distribution items of income gain loss deduction and credit will be taken into account as required by the applicable intercompany_transaction regulations see sec_1_1502-13 and sec_1 as in effect before the publication of t d 1995_2_cb_147 and as currently in effect reg sec_1_1502-13 as published by t d further any excess_loss_account of a member in the stock of another member that is required to be taken into account by sec_1_1502-19 will be included in income as appropriate 4cc no party to the controlled contribution is under the jurisdiction of a court in a title_11_or_similar_case within the meaning of sec_368 4dd with respect to the new gra to be entered into by distributing as parent of the distributing consolidated_group in connection with the proposed transactions controlled will to the extent required under sec_1_367_a_-8 and sec_1_367_a_-8 enter into a new gra the controlled gra i identifying all triggering events and exceptions thereto resulting from the proposed transactions ii designating a successor transferor_corporation transferee corporation and or transferred corporation as applicable and iii complying with all other requirements for gras under sec_1_367_a_-8 additionally controlled will comply with the notification requirements of sec_1_367_a_-8 with respect to any such controlled gra 4ee distributing has not been and will not be a united_states_real_property_holding_corporation as defined in sec_897 at any time during the five-year period ending on the date of the external distribution the combination 5a the combination will be effected pursuant to the laws of state b and will qualify as a statutory merger under applicable state b law pursuant to the plan of merger by operation of law the following will occur simultaneously at the effective time of the combination i all of the assets and liabilities of merger partner immediately before the combination will become the assets and liabilities of controlled and ii merger partner will cease its separate legal existence for all purposes 5b the fair_market_value of the combination consideration will be approximately equal to the fair_market_value of the merger partner stock surrendered by holding partnership in the exchange 5c at least percent of the proprietary interests in merger partner will be exchanged for shares of controlled common_stock and will be preserved plr-137376-13 within the meaning of sec_1_368-1 5d there is no plan or intention for controlled or any person related within the meaning of sec_1_368-1 to controlled to redeem or otherwise acquire directly or indirectly any controlled common_stock issued in the combination 5e there is no plan or intention to sell or otherwise dispose_of any of the merger partner assets acquired in the combination except for dispositions made in the ordinary course of business or transfers of assets to which sec_368 or sec_1_368-2 applies 5f 5g the liabilities of merger partner to be assumed as determined under sec_357 by controlled and the liabilities to which the transferred assets of merger partner are subject were incurred by merger partner in the ordinary course of its business and are associated with the assets transferred following the combination controlled either directly or through one or more members of its qualified_group within the meaning of sec_1_368-1 will continue the historic_business of merger partner or use a significant portion of merger partner’s historic assets in a business 5h there will be no intercorporate indebtedness existing between merger partner and controlled that will be issued acquired or settled at a discount 5i immediately before the combination the total fair_market_value of the assets of merger partner to be transferred to controlled will exceed the sum of i the total amount of liabilities if any to be assumed as determined under sec_357 by controlled plus any liabilities to which the transferred assets will be subject ii the total amount of liabilities if any owed by merger partner to controlled that will be discharged or extinguished in connection with the combination and iii the amount of cash the fair_market_value of the tra and the fair_market_value of any other_property other than property permitted to be received under sec_361 without the recognition of gain to be received by holding partnership from controlled in connection with the combination 5j immediately after the combination the aggregate fair_market_value of the assets of controlled will exceed the sum of liabilities of controlled plus the other liabilities if any to which the assets of controlled will be subject plr-137376-13 5k no two parties to the combination will be investment companies as defined in sec_368 and iv 5l at the time of the combination neither merger partner nor controlled will be under the jurisdiction of a court in a title_11_or_similar_case within the meaning of sec_368 5m the combination will be undertaken to facilitate the strategic combination of distributing 4’s business a to be conducted by the controlled sag with the business of merger partner 5n controlled merger partner and holding partnership will each pay their own expenses_incurred in connection with the combination 5o the receipt of cash in lieu of fractional shares if any of controlled stock will be solely for the purpose of avoiding the expense and inconvenience of issuing and maintaining fractional shares and will not represent separately bargained for consideration the total cash consideration that will be received in connection with the combination in lieu of fractional shares of controlled stock will not exceed one percent of the total consideration that will be distributed to holders of merger partner stock in the combination any fractional share interests will be aggregated and no holder of merger partner stock will receive cash in lieu of fractional shares in an amount equal to or greater than the value of one full share of merger partner stock the merger partner sub contribution 6a the merger partner sub contribution will be undertaken to integrate controlled 2’s business a with merger partner’s business a 6b at the time of the merger partner sub contribution controlled will directly own percent of the outstanding equity interests in dre dre will own percent of the outstanding equity interests in dre and dre and dre will be disregarded as separate from controlled 6c no actions will be taken eg an entity classification election to be treated as an association_taxable_as_a_corporation for u s federal_income_tax purposes under sec_301_7701-2 and sec_301_7701-3 admission of a second member that is not disregarded as separate from controlled etc and no other circumstances will exist that will prevent dre and dre from being disregarded as separate from controlled under sec_301_7701-2 and sec_301_7701-3 at the time of the merger partner sub contribution plr-137376-13 6d no merger partner sub stock_or_securities will be issued or deemed issued for services rendered to or for the benefit of merger partner sub in connection with the merger partner sub contribution 6e no merger partner sub stock_or_securities will be issued or deemed issued for indebtedness of merger partner sub that is not evidenced by a security or for interest on indebtedness of merger partner sub which accrued on or after the beginning of the holding_period of controlled for the indebtedness 6f 6g none of the stock to be transferred in the merger partner sub contribution is sec_306 stock within the meaning of sec_306 of the code the merger partner sub contribution is not the result of a solicitation by a promoter broker or investment house 6h controlled will not retain any rights in the property transferred to merger partner sub 6i 6j 6k 6l the aggregate adjusted_basis and the aggregate fair_market_value of the assets to be transferred by controlled to merger partner sub will in each instance be equal to or exceed the sum of the liabilities to be assumed by merger partner sub plus any liabilities to which the transferred assets are subject except for the debt facility the liabilities of controlled to be assumed by merger partner sub were incurred in the ordinary course of business and are associated with the assets to be transferred there is no indebtedness between controlled and merger partner sub and there will be no indebtedness created in favor of controlled as a result of the merger partner sub contribution the merger partner sub contribution will occur pursuant to a plan agreed upon before the merger partner sub contribution in which the rights of the parties are defined 6m all exchanges pursuant to the merger partner sub contribution will occur on approximately the same date 6n there is no plan or intention on the part of merger partner sub to redeem or otherwise acquire any stock issued or deemed to be issued in the merger partner sub contribution plr-137376-13 6o taking into account all issuances of shares of merger partner sub stock in connection with the merger partner sub contribution any issuance of stock for services the exercise of any merger partner sub stock right warrant or subscription any public offering of merger partner sub stock and all sales exchanges transfers by gift or other dispositions of any merger partner sub stock to be received in the merger partner sub contribution controlled is and will remain the sole shareholder of merger partner sub and therefore will be in control of merger partner sub within the meaning of sec_368 after the merger partner sub contribution 6p controlled will be deemed to receive stock of merger partner sub approximately equal to the fair_market_value of the property transferred in the merger partner sub contribution 6q merger partner sub will remain in existence and retain and use the property transferred to it in a trade_or_business 6r there is no plan or intention by merger partner sub to dispose_of the property transferred to it except in the normal course of its business operations 6s each of controlled and merger partner sub will pay its own expenses if any incurred in connection with the merger partner sub contribution 6t merger partner sub will not be an investment_company within the meaning of sec_351 and sec_1_351-1 6u 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_or_securities received in the merger partner sub contribution will not be used to satisfy indebtedness of controlled 6v merger partner sub will not be a personal services corporation within the meaning of sec_269a of the code 6w the total fair_market_value of the property transferred by controlled to merger partner sub will exceed the sum of i the amount of liabilities assumed as determined under sec_357 by merger partner sub in connection with the merger partner sub contribution ii the amount of liabilities owed to merger partner sub by controlled that were discharged or extinguished in connection with the merger partner sub contribution and iii the amount of any money and the fair_market_value plr-137376-13 of any other_property other than stock permitted to be received under sec_351 without the recognition of gain received by controlled in connection with the merger partner sub contribution 6x immediately after the merger partner sub contribution the aggregate fair_market_value of the assets of merger partner sub will exceed the sum of its liabilities whether indebtedness or other forms of obligations including contingent obligations plus the liabilities if any to which the assets of merger partner sub are subject 6y controlled 2’s adjusted_basis in the property transferred pursuant to the merger partner sub contribution will not exceed the fair_market_value of the transferred property 6z all transactions undertaken contemporaneously with in anticipation of in conjunction with or in any way related to the merger partner sub contribution have been fully disclosed 6aa controlled and all other members of the controlled affiliated_group including the subsidiaries of merger partner will effect an election to file a consolidated_return for u s federal_income_tax purposes effective immediately after the external distribution with controlled as the common parent the controlled consolidated_group 6bb no member of the controlled consolidated_group is described in or will engage in a transaction during the relevant time period that is described in any of the paragraphs of sec_1_1502-13 - vi the controlled contribution and the first internal distribution ruling sec_1 the controlled contribution together with the first internal distribution will qualify as a reorganization within the meaning of sec_368 distributing and controlled each will be a_party_to_a_reorganization within the meaning of sec_368 distributing will not recognize any gain_or_loss upon its transfer of assets to controlled in exchange for controlled stock and controlled 1’s assumption_of_liabilities in the controlled contribution sec_361 and sec_357 controlled will not recognize any gain_or_loss upon its receipt of assets from distributing in the controlled contribution sec_1032 plr-137376-13 controlled 1’s basis in each asset received from distributing in the controlled contribution will equal the basis of the asset in the hands of distributing immediately before the controlled contribution sec_362 controlled 1’s holding_period in each asset received from distributing in the controlled contribution will include the period during which distributing held that asset sec_1223 distributing will not recognize any gain_or_loss upon its distribution of the stock of controlled to distributing in the first internal distribution sec_361 distributing will not recognize any gain_or_loss and no amount will be includible in its income upon its receipt of the stock of controlled in the first internal distribution sec_355 distributing 2’s basis in its distributing stock and controlled stock immediately after the first internal distribution will be the same as its basis in the distributing stock immediately before the first internal distribution allocated between the stock of distributing and controlled in proportion to the fair_market_value of each immediately following the first internal distribution in accordance with sec_1_358-2 sec_358 b and c distributing 2’s holding_period in the controlled stock it received in the first internal distribution will include the holding_period of the distributing stock with respect to which the first internal distribution is made provided that the distributing stock is held as a capital_asset on the date of the first internal distribution sec_1223 earnings_and_profits if any will be allocated between distributing and controlled in accordance with sec_312 and sec_1 a the first internal distribution will be an exchange to which sec_1_367_b_-1 sec_1_367_b_-5 sec_1_367_b_-5 and sec_1_367_b_-5 apply if the distributing shareholder’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 such corporation the shareholder’s basis in such stock immediately after the first internal distribution must be reduced by the amount of the difference however the plr-137376-13 distributing shareholder’s basis in such stock must not be reduced below zero and to the extent the foregoing reduction would reduce its basis below zero the shareholder must instead include such amount in income as a deemed_dividend from such corporation if the shareholder reduces the basis in the stock of distributing or controlled or has an inclusion with respect to such stock such shareholder must increase its basis in the stock of the other corporation to the extent provided in sec_1_367_b_-5 the second internal distribution distributing will not recognize any gain_or_loss and no amount will be includible in its income upon the receipt of the stock of controlled in the second internal distribution sec_355 revrul_62_138 distributing will not recognize any gain_or_loss upon its distribution of the stock of controlled to distributing in the second internal distribution sec_355 distributing 3’s basis in its distributing stock and controlled stock immediately after the second internal distribution will be the same as its basis in the distributing stock immediately before the second internal distribution allocated between the stock of distributing and controlled in proportion to the fair_market_value of each immediately following the second internal distribution in accordance with sec_1_358-2 sec_358 b and c distributing 3’s holding_period in the controlled stock it received in the second internal distribution will include the holding_period of the distributing stock with respect to which the second internal distribution is made provided that the distributing stock is held as a capital_asset on the date of the second internal distribution sec_1223 distributing 2’s earnings_and_profits if any will be adjusted and controlled 1’s earnings_and_profits will be determined in accordance with sec_312 and sec_1_312-10 the second internal distribution will be distribution to which sec_1_367_b_-1 sec_1_367_b_-5 sec_1_367_b_-5 and sec_1_367_b_-5 apply if distributing 3’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 such corporation distributing 3’s basis in such stock immediately after the second internal distribution must be reduced by the amount of the difference however distributing 3’s basis in plr-137376-13 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 the third internal distribution distributing will not recognize any gain_or_loss and no amount will be includible in its income upon its receipt of the stock of controlled in the third internal distribution sec_355 revrul_62_138 distributing will not recognize any gain_or_loss upon its distribution of controlled stock to distributing in the third internal distribution sec_355 distributing 4’s basis in its distributing stock and controlled stock immediately after the third internal distribution will be the same as its basis in the distributing stock immediately before the third internal distribution allocated between the stock of distributing and controlled in proportion to the fair_market_value of each immediately following the third internal distribution in accordance with sec_1_358-2 sec_358 b and c distributing 4’s holding_period in the controlled stock it received in the third internal distribution will include the holding_period of the distributing stock with respect to which the third internal distribution is made provided that the distributing stock is held as a capital_asset on the date of the third internal distribution sec_1223 distributing 3’s earnings_and_profits if any will be adjusted and controlled 1’s earnings_and_profits will be determined in accordance with sec_312 and sec_1_312-10 and sec_1_1502-33 provided that distributing and distributing elect to apply the provisions of sec_1_1248_f_-2 in accordance with sec_1 f - b distributing will not be required under sec_1 f - b to include in gross_income as a dividend the sec_1248 amount with respect to the stock of controlled distributed to distributing sec_1_1248_f_-2 the controlled contribution and the external distribution plr-137376-13 the controlled contribution together with the external distribution will qualify as a reorganization within the meaning of sec_368 distributing and controlled each will be a_party_to_a_reorganization within the meaning of sec_368 distributing will not recognize any gain_or_loss upon its transfer of assets to controlled in exchange for controlled stock controlled 2’s assumption_of_liabilities and the base cash payment in the controlled contribution sec_361 sec_361 sec_357 controlled will not recognize any gain_or_loss upon its receipt of assets from distributing in the controlled contribution sec_1032 controlled 2’s basis in each asset received from distributing in the controlled contribution will equal the basis of the asset in the hands of distributing immediately before the controlled contribution increased by the amount of gain if any recognized by distributing on such transfer sec_362 controlled 2’s holding_period in each asset received from distributing in the controlled contribution will include the period during which such asset was held by distributing sec_1223 distributing will not recognize any gain_or_loss upon its distribution of the stock of controlled in the external distribution sec_361 distributing 4’s shareholders will not recognize any gain_or_loss and no amount will be includible in their income upon the receipt of controlled stock in the external distribution sec_355 each distributing shareholder’s basis in the distributing stock and controlled stock immediately after the external distribution including any fractional share interest in controlled to which the shareholder may be entitled will equal the basis of the distributing stock that the shareholder held immediately before the external distribution allocated between the stock of distributing and controlled in proportion to the fair_market_value of each immediately following the external distribution in accordance with sec_1_358-2 sec_358 b and c each distributing shareholder’s holding_period in the controlled stock received in the external distribution including any fractional share interest in controlled to which the shareholder may be entitled will include the holding_period of the distributing stock with respect to which the external plr-137376-13 distribution is made provided that the shareholder holds such distributing stock as a capital_asset on the date of the external distribution sec_1223 the receipt by distributing shareholders of cash in lieu of fractional shares of controlled common_stock will be treated for u s federal_income_tax purposes as if the fractional shares had been distributed to the distributing shareholders as part of the external distribution and then had been disposed of by such shareholders for the amount of such cash in a sale_or_exchange the gain_or_loss recognized if any will be measured by the difference between the basis of the fractional share received determined using the bases allocated to the fractional shares in ruling and the amount of cash received sec_1001 any gain_or_loss will be treated as a capital_gain or loss provided that such fractional share would be held as a capital_asset on the date of the external distribution by the selling shareholder sec_1221 and sec_1222 such gain_or_loss will be short-term or long-term_capital_gain or loss determined using the holding_period provided in ruling proper allocation of earnings_and_profits if any between distributing and controlled will be made in accordance with sec_312 and sec_1_312-10 and sec_1_1502-33 the earnings_and_profits if any of controlled to the extent attributable to distributing under sec_1_1248-2 or sec_1_1248-3 whichever is applicable that were accumulated in taxable years of such foreign_corporation beginning after date and during the period in which such corporation was a controlled_foreign_corporation will be attributable to such stock held by controlled sec_1_1248-1 following the external distribution controlled will not be a successor of distributing for purposes of sec_1504 therefore controlled and its direct and indirect subsidiaries that are includible corporations under sec_1504 and satisfy the ownership requirements of sec_1504 will be members of an affiliated_group_of_corporations entitled to file a consolidated u s federal_income_tax return with controlled as the common parent except for purposes of sec_355 any post-external distribution payments made by distributing to controlled or vice versa pursuant to the related arrangements that i have arisen or will arise with respect to a taxable_period ending on or before the external distribution or for a taxable_period beginning on or before and ending after the external distribution and ii will not have become fixed and ascertainable until after the external distribution will be treated as occurring immediately before the external plr-137376-13 distribution see 344_us_6 revrul_83_73 1983_1_cb_84 the combination provided that the combination qualifies as a statutory merger under applicable law for u s federal_income_tax purposes the combination will be treated as a transfer by merger partner of its assets to controlled in exchange for controlled stock controlled 2’s assumption of merger partner’s liabilities and the tra followed by merger partner’s distribution to holding partnership of the controlled stock the tra and any cash pursuant to the merger partner working_capital adjustment pursuant to a plan_of_reorganization in cancellation of holding partnership’ stock in merger partner the combination will constitute a reorganization within the meaning of sec_368 merger partner and controlled will each be a_party_to_a_reorganization within the meaning of sec_368 merger partner will not recognize any gain_or_loss upon the transfer of its assets to controlled in exchange for controlled common_stock the tra and the assumption of its liabilities in the combination sec_357 and sec_361 merger partner will not recognize any gain_or_loss on the distribution of controlled stock and the tra to holding partnership in the combination sec_361 holding partnership will recognize gain if any in the stock of merger partner in an amount not in excess of the sum of the fair_market_value of the tra and any cash distributed to it or on its behalf pursuant to the merger partner working_capital adjustment sec_356 if the exchange has the effect of the distribution of a dividend determined with the application of sec_318 then the amount of the gain recognized that is not in excess of holding partnership’s ratable share of undistributed_earnings and profits of merger partner will be treated as a dividend sec_356 the determination of whether the exchange has the effect of a distribution of a dividend will be made in accordance with the principles set forth in 489_us_726 the remainder if any of the gain recognized will be treated as gain from the exchange of property no loss will be recognized on the exchange sec_356 holding partnership’s basis in the controlled stock received in the combination including any fractional share interest deemed received will be the same as its basis in the merger partner stock surrendered in exchange therefore decreased by the fair_market_value of the tra received and the plr-137376-13 amount of any cash distributed pursuant to the merger partner working_capital adjustment and increased by the amount of gain recognized and the amount if any treated as a dividend sec_358 holding partnership’s holding_period in the controlled stock received in the combination including any fractional share interest deemed received will include the holding_period of the merger partner stock surrendered in exchange therefore provided that the merger partner stock is held as a capital_asset on the date of the combination sec_1223 holding partnership’s receipt of cash in lieu of a fractional share of controlled stock will be treated for federal_income_tax purposes as if the fractional share had been distributed to holding partnership as part of the combination and then had been disposed of by holding partnership for the amount of cash in a sale_or_exchange pursuant to which gain_or_loss is recognized under sec_1001 controlled will recognize no gain_or_loss on its receipt of merger partner’s assets in exchange for controlled stock and the tra sec_1032 controlled 2’s basis in each asset received from merger partner in the combination will equal the basis of such asset in the hands of merger partner immediately before the combination sec_362 controlled 2’s holding_period in each asset received from merger partner in the combination will include the period during which such asset was held by merger partner sec_1223 controlled will succeed to and take into account the items of merger partner described in sec_381 subject_to the provisions and limitations of sec_381 sec_382 sec_383 sec_384 and sec_1502 and the regulations thereunder the merger partner sub contribution the merger partner sub contribution will be treated for u s federal_income_tax purposes as though controlled had transferred assets via dre and dre to merger partner sub in exchange for stock in merger partner sub and the assumption by merger partner sub of certain of controlled 2’s liabilities via dre and dre in an exchange described in sec_351 sec_304 will not apply to the exchange sec_1 b ii b sec_1_1502-80 plr-137376-13 controlled will not recognize any gain_or_loss on its transfer of assets to merger partner sub solely in exchange for the deemed issuance of shares of merger partner sub stock and merger partner sub’s assumption of controlled 2’s liabilities including the debt facility pursuant to the merger partner sub contribution sec_351 and sec_357 and sec_1 g i b merger partner sub will not recognize any gain_or_loss on its receipt of assets and liabilities in exchange for the deemed issuance of shares of its stock and its assumption_of_liabilities pursuant to the merger partner sub contribution sec_1032 controlled 2’s basis in its merger partner sub stock following the merger partner sub contribution will be adjusted based on its basis in the property transferred to merger partner sub and on the amount of its liabilities other than liabilities excluded under sec_357 assumed by merger partner sub sec_358 and d and sec_1_1502-80 merger partner sub’s basis in the property received in the merger partner sub contribution will equal controlled 2’s basis in such property immediately before the merger partner sub contribution sec_362 and sec_1_1502-80 controlled will adjust its holding_period in its merger partner sub stock following the merger partner sub contribution to include controlled 2’s holding_period in the transferred property provided that the property is held by controlled as a capital_asset on the date of the merger partner sub contribution sec_1223 and sec_1_1502-13 merger partner sub’s holding_period in the property received pursuant to the merger partner sub contribution will include controlled 2’s holding_period immediately before the merger partner sub contribution sec_1223 and sec_1_1502-13 the earnings_and_profits if any of controlled to the extent attributable to controlled under sec_1_1248-2 or sec_1_1248-3 whichever is applicable that were accumulated in taxable years of such foreign_corporation beginning after date and during the period in which such corporation was a controlled_foreign_corporation will be attributable to such stock held by merger partner sub sec_1 a plr-137376-13 caveats no opinion is expressed about the federal_income_tax treatment of the proposed transactions under other provisions of the code or regulations or the federal_income_tax treatment of any conditions existing at the time of or effects resulting from the proposed transactions that are not specifically covered by the above rulings in particular no opinion is expressed regarding i ii whether any of the distributions satisfy the business_purpose requirement of sec_1_355-2 whether any of the distributions are used principally as a device for the distribution of the earnings_and_profits of the distributing_corporation or controlled_corporation or both see sec_355 and sec_1_355-2 iii whether any of the distributions are part of a plan or a series of related transactions pursuant to which one or more persons will acquire directly or indirectly stock representing percent or greater interest in the distributing_corporation or the controlled_corporation see sec_355 and sec_1_355-7 iv whether distributing might be required to recognize gain but not loss on the transfer of assets to controlled in the controlled contribution to the extent the consideration received in exchange therefor consists of the additional payment or the extent to which distributing will be required to include in its gross_income amounts treated as interest by reason of sec_483 v vi the tax consequences of the restructuring or of any transactional step that occurred as part of the restructuring the tax consequences of the transaction by means of which the merger partner shareholders transferred their interests in merger partner to holding partnership procedural matters this ruling is directed only to the taxpayer requesting it sec_6110 of the code provides that it may not be used or cited as precedent a copy of this letter must be attached to any income_tax return to which it is relevant alternatively taxpayers filing their returns electronically may satisfy this requirement by attaching a statement to their return that provides the date and control plr-137376-13 number plr-137376-13 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 maury passman chief branch office of associate chief_counsel corporate cc