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 psi b09 plr-133105-06 date date --------------------------- -------------------------------- ------- ------------------------- ------------------------- -------------------------- -------------------------------- ----------------------------- ------- -------------------- --------------------------------------------- ----------------------------------------- --------------------------------------- ------------------------ legend trustee trust year settlor son son daughter wife year trust company corporation bank bank bank dear ---------- this responds to a letter dated date submitted on behalf of trust in which rulings are requested on the estate gift and generation-skipping_transfer_tax consequences of the proposed modification to trust and the anticipated exercise of a limited testamentary_power_of_appointment provided under trust facts the facts and representations submitted are summarized as follows in year settlor established trust an irrevocable_trust for the benefit of his wife and descendants plr-133105-06 son son and daughter are the children of settlor and wife settlor and wife are currently deceased and son son and daughter are over the age of trust was created before date according to the provisions of paragraphs b c and d of article of trust upon the death of wife in year the trust corpus was divided into three shares one for each child of settlor and wife according to paragraph d of article the trustee of trust may distribute to each child from his or her respective separate share so much of the net_income as the trustee deems wise and prudent in the trustee’s absolute discretion for each child over the age of the trustee may distribute from his or her respective share so much of the principal and accumulated income of trust as such child shall from time to time request in writing paragraph d of article further provides that upon the death of a child of settlor and wife the trustee shall distribute the entire remaining principal and accumulated income of the child’s separate share of trust to or for the benefit of such of the descendants of the child as such child shall direct in his or her will son son and daughter anticipate exercising their respective limited testamentary power to appoint the principal and income of their respective trust as provided in trust the rules governing the appointment of successor trustees are provided in article of trust paragraph b provides that if after the death of settlor any trustee shall for any reason fail or cease to act as trustee the power to appoint a successor trustee may be exercised by the following persons in the following order by a majority of trustees of trust company if trust company shall cease to exist and no business_enterprise shall acquire the property comprising the trust estate of trust company by the board_of directors of corporation the board or any successor organization which shall acquire substantially_all of the assets and business of corporation and in the event of the nonexistence of all of the foregoing by a majority in interest in the income beneficiaries who shall be under no disability trust company has ceased to exist and the board currently has the power to appoint successor trustees in a meeting of the board after the death of wife the board resolved to appoint successor trustees of the trusts established under trust as follows if the current trustee or any successor trustee appointed hereunder ceases to act as trustee of any trust the board appoints as trustee of such trust such qualified bank or trust company as the beneficiary of such trust may appoint by signed written instrument delivered to the board no later than thirty days after such cessation to act if such beneficiary does not make an appointment the board appoints as trustee of such trust the first of the following that is then in existence is then a qualified bank or trust company and is then willing to act as trustee of such trust a bank b bank and c bank plr-133105-06 the board’s resolution defines qualified bank or trust company as a bank or trust company that is qualified to accept trusts that is not related or subordinate to any beneficiary of a_trust within the meaning of sec_672 of the code that has engaged in the trust business for at least ten years immediately prior to its appointment as trustee by the board and that has assets under management of at least one billion dollars the board further resolved that a bank or trust company ceases to act as trustee of a_trust upon the first to occur of its resignation its removal as trustee by thirty days written notice signed by the beneficiary of the trust and delivered to it and to the board and its cessation to exist or to be qualified to accept trusts the board’s resolution is only effective upon the receipt of a favorable ruling issued by the service confirming that the implementation of the resolution will not cause any trust to be subject_to the generation-skipping_transfer gst tax and will not cause any trust to be taxed in the estate of the beneficiary of that trust you request the following rulings a beneficiary’s power to appoint and remove a qualified bank or trust company as successor trustee of his or her respective trust will not be considered the creation of a general_power_of_appointment under sec_2041 or sec_2514 and the exercise of this power will not cause the assets of a beneficiary’s trust to be includible in his or her estate nor will the exercise of the power be considered a transfer for federal gift_tax purposes the exercise of a beneficiary’s testamentary special_power_of_appointment will not be considered an exercise of the beneficiary’s lifetime general_power_of_appointment the implementation and operation of the board’s resolution will not cause trust or the beneficiaries’ trusts created thereunder to lose their exempt status under b a of the tax_reform_act_of_1986 and sec_26_2601-1 of the generation-skipping_transfer_tax regulations and will not subject distributions from any of the trusts to the gst tax law and analysis ruling sec_1 and sec_2041 of the internal_revenue_code of provides that the value of the gross_estate shall include the value of all property with respect to which a general_power_of_appointment created on or before date is exercised by the decedent by will or by certain lifetime disposition the failure to exercise such a power or the complete release of such a power shall not be deemed an exercise thereof a general_power_of_appointment is defined by sec_2041 as a power exercisable in favor of the decedent his estate his creditors or the creditors of his estate plr-133105-06 sec_20_2041-1 of the estate_tax regulations provides in part that a donee may have a power_of_appointment if he has the power to remove or discharge a trustee and appoint himself for example if under the terms of the instrument the trustee or his successor has the power to appoint the principal of the trust for the benefit of individuals including himself and the decedent has the unrestricted power to remove or discharge the trustee at any time and appoint any other person including himself the decedent is considered as having a power_of_appointment however the mere power of management investment custody of assets or the power to allocate receipts and disbursements as between income and principal exercisable in a fiduciary capacity whereby the holder has no power to enlarge or shift any of the beneficial interests therein except as an incidental consequence of the discharge of the fiduciary duties is not a power_of_appointment sec_20_2041-1 provides that a decedent may have two powers under the same instrument one of which is a general_power_of_appointment and the other of which is not for example a beneficiary may have a power to withdraw trust corpus during his life and a testamentary power to appoint the corpus among his descendants the testamentary power is not a general_power_of_appointment sec_20_2041-2 provides that if a general_power_of_appointment created on or before date is exercised only as to a portion of the property subject_to the power sec_2041 is applicable only to the value of that portion sec_2514 provides that an exercise of a general_power_of_appointment created on or before date shall be deemed a transfer of property by the individual possessing such power but the failure to exercise such a power or the complete release of such a power shall not be deemed an exercise thereof sec_2514 provides that a general_power_of_appointment is a power that is exercisable in favor of the individual possessing the power the possessor his estate his creditors or the creditors of his estate sec_25_2514-1 of the gift_tax regulations provides in part that a donee may have a power_of_appointment if he has the power to remove or discharge a trustee and appoint himself for example if under the terms of the instrument the trustee or his successor has the power to appoint the principal of the trust for the benefit of individuals including himself and a another person has the unrestricted power to remove or discharge the trustee at any time and appoint any other person including himself a is considered as having a power_of_appointment however the mere power of management investment custody of assets or the power to allocate receipts and disbursements as between income and principal exercisable in a fiduciary capacity whereby the holder has no power to enlarge or shift any of the beneficial interests plr-133105-06 therein except as an incidental consequence of the discharge of the fiduciary duties is not a power_of_appointment sec_25_2514-1 provides that a beneficiary may have two powers under the same instrument one of which is a general_power_of_appointment and the other of which is not for example a beneficiary may have a general power to withdraw a limited portion of trust corpus during his life and a further power exercisable during his lifetime to appoint the corpus among his children the latter power is not a general_power_of_appointment sec_25_2514-2 provides that if a general_power_of_appointment created on or before date is exercised only as to a portion of the property subject_to the power the exercise is considered to be a transfer only as to the value of that portion revrul_95_58 1995_2_cb_191 holds that a decedent grantor's reservation of an unqualified power to remove a trustee and to appoint an individual or corporate successor trustee that is not related or subordinate to the decedent within the meaning of sec_672 is not considered a reservation of the trustee's discretionary powers of distribution over the property transferred by the decedent grantor to the trust accordingly the trust corpus is not included in the decedent's gross_estate under sec_2036 or sec_2038 the ruling notes that the eighth circuit in 973_f2d_1409 8th cir concluded that the decedent had not retained dominion and control_over assets transferred to a_trust by reason of his power to remove and replace the trustee with a party that was not related or subordinate to the decedent accordingly the court held that under sec_25 c the decedent made a completed_gift when he created the trust and transferred assets to it sec_672 defines the term related_or_subordinate_party to mean any nonadverse_party who is the grantor’s spouse if living with the grantor or any one of the following the grantor’s father mother issue brother or sister an employee of the grantor a corporation or any employee of a corporation in which the stock holdings of the grantor and the trust are significant from the viewpoint of voting control a subordinate employee of a corporation in which the grantor is an executive in regard to the first ruling requested upon the resignation of the current trustee a bank or trust company that is appointed as successor trustee will have the sole discretionary authority to make distributions of income from each trust after the resignation of the current trustee son son and daughter will have an unqualified power to remove a trustee and to appoint a successor trustee the board’s resolution however restricts any appointment of a successor trustee to a qualified bank or trust company which is defined therein as a bank or trust company that is qualified to accept trusts that is not related or subordinate to any beneficiary of a_trust within the meaning of sec_672 of the code that has engaged in the trust business for at least ten years immediately prior to its appointment as trustee by the board and that has assets under management of at plr-133105-06 least one billion dollars the removal and appointment powers given to son son and daughter are not the equivalent of the power referred to in the examples in sec_20_2041-1 and sec_25_2514-1 where an individual may remove a trustee and appoint himself instead the proposed power given to son son and daughter is the equivalent of the power referenced in revrul_95_58 where a replacement trustee may not be a_related_or_subordinate_party within the meaning of sec_672 accordingly based on the facts submitted and the representations made we conclude that the board’s resolution will not cause son son or daughter to have a general_power_of_appointment under sec_2041 or sec_2514 thus the exercise of this power will not cause the assets of a beneficiary’s trust to be includible in his or her estate nor will the exercise of the power be considered a transfer for federal gift_tax purposes in regard to the second ruling requested we note that son son and daughter anticipate exercising their respective limited testamentary powers of appointment to appoint property of his or her respective trust to his or her descendants son son and daughter also have an inter_vivos general power to appoint as much principal and accumulated income from his or her respective trust as he or she requests in writing to the trustee as provided in sec_20_2041-1 and sec_25_2514-1 the same trust instrument as in this case may give a beneficiary two separate powers one of which is a general_power_of_appointment and one of which is not the exercise of a limited testamentary_power_of_appointment is not considered as an exercise of a lifetime general_power_of_appointment even though both powers are over the same trust assets if son son or daughter exercise only his or her respective limited testamentary_power_of_appointment and not his or her general_power_of_appointment the assets from each trust will not be included in his or her gross_estate under sec_2041 if son son or daughter exercises his or her lifetime general_power_of_appointment the exercise will be considered to be a transfer under sec_2514 to the extent of the value of property with respect to which the general_power_of_appointment is exercised ruling sec_2601 of the internal_revenue_code imposes a tax on every generation-skipping_transfer gst which is defined under sec_2611 as a taxable_distribution a taxable_termination or a direct_skip under of the tax_reform_act_of_1986 the act gst tax is generally applicable to generation-skipping transfers made after date however under b a of the act and sec_26 b i of the generation-skipping_transfer_tax regulations the tax does not apply to a transfer under a_trust that was irrevocable on date except to the extent the transfer is made out of corpus added to the trust by an actual or constructive_addition after date plr-133105-06 sec_26_2601-1 provides rules for determining when a modification judicial construction settlement agreement or trustee action with respect to a_trust that is exempt from the gst tax under sec_26_2601-1 will not cause the trust to lose its exempt status these rules are applicable only for purposes of determining whether an exempt trust retains exempt status for gst tax purposes the rules do not apply in determining for example whether the transaction results in a gift subject_to gift_tax or may cause the trust to be included in the gross_estate of a beneficiary or may result in the realization of capital_gain for purposes of sec_1001 sec_26_2601-1 provides that a modification of the governing instrument by judicial reformation or nonjudicial reformation that is valid under applicable state law will not cause an exempt trust to be subject_to the gst tax if the modification does not shift a beneficial_interest in the trust to any beneficiary who occupies a lower generation as defined in sec_2651 than the person or persons who held the beneficial_interest prior to the modification and the modification does not extend the time for vesting of any beneficial_interest in the trust beyond the period provided for in the original trust a modification of an exempt trust will result in a shift in a beneficial_interest to a lower generation beneficiary if the modification can result in either an increase in the amount of a gst or the creation of a new gst sec_26_2601-1 example provides as follows in grantor executed an irrevocable_trust for the benefit of grantor’s issue naming a bank and five other individuals as trustees in the appropriate local court approves a modification of the trust that decreases the number of trustees which results in lower administrative costs the modification pertains to the administration of the trust and does not shift a beneficial_interest in the trust to any beneficiary who occupies a lower generation as defined in sec_2651 than the person or persons who held the beneficial_interest prior to the modification in addition the modification does not extend the time for vesting of any beneficial_interest in the trust beyond the period provided for in the original trust therefore the trust will not be subject_to the provisions of chapter in the present case trust was irrevocable on date it is represented that no additions actual or constructive have been made to trust after that date the change in the process for appointing and removing successor trustees as set forth in the board’s resolution is similar to the change described in sec_26_2601-1 example the board’s resolution will not result in a shift of any beneficial_interest to any beneficiary who occupies a generation lower than the persons holding the beneficial interests in the trusts prior to the board’s resolution and the board’s resolution will not extend the time for vesting of any beneficial_interest in trust beyond the period provided for in trust accordingly based on the facts submitted and the representations made we conclude that the implementation and operation of the board’s resolution will not cause trust to plr-133105-06 lose its status under of the tax_reform_act_of_1986 as a_trust exempt from the application of the gst tax under chapter of the code except as expressly provided herein no opinion is expressed or implied concerning the tax consequences of any aspect of any transaction or item discussed or referenced in this letter 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 in accordance with the power_of_attorney on file with this office a copy of this letter is being sent to your authorized representative the rulings contained in this letter are based upon information and representations submitted by the taxpayer and accompanied by a penalty of perjury statement executed by an appropriate party while this office has not verified any of the material submitted in support of the request for rulings it is subject_to verification on examination sincerely melissa c liquerman branch chief branch passthroughs special industries-


internal_revenue_service cor-115873-00 number info release date uil the honorable danny k davis u s house of representatives washington d c dear mr davis date thank you for your letter of date signed by you and a number of your colleagues encouraging the internal_revenue_service to immediately readjust the business standard mileage rate to reflect the recent increase in gasoline prices you note that the increased cost has particularly burdened self-employed taxpayers who use automobiles for business purposes gasoline prices we realize increased gasoline prices are an economic burden however the cost of gasoline is only one part of the business standard mileage rate which includes fixed and operating automobile costs these costs include depreciation or lease payments maintenance and repairs insurance and license and registration fees in addition to gasoline and oil less than one-third of the cents per mile rate comes from the cost of gasoline and oil thus an immediate adjustment in the rate taking into account the recent increase in gasoline prices might not be significant setting the business standard mileage rate the rate is a national average amount determined by an annual study performed by an independent_contractor who is an expert in the cost analysis of business use of automobiles the contractor uses recent data from each state on the component costs of operating the most popular automobiles the contractor then combines this data to achieve a national composite cents-per-mile rate advantages of using the business standard mileage rate reducing a taxpayer’s record-keeping burden is the principal advantage of using the rate gasoline prices rise and fall during the year but taxpayers may continue to use the same rate without having to keep records of actual expenses although rising gasoline prices can be a disadvantage for taxpayers who use the rate falling prices can work to their advantage for example although gasoline prices fell in for all of and through date taxpayers were able to use the rate that reflected the earlier higher prices taxpayer’s options to deduct the ordinary and necessary expenses of using an automobile for business purposes a taxpayer must substantiate the cost date place and business_purpose of each use of the automobile by adequate_records for the cost the taxpayer has two options cid substantiate actual cost by keeping records or by other_sufficient_evidence cid use the business standard mileage rate using the rate gives approximate not actual costs taxpayers can deduct the actual business_expenses of using a personally-owned automobile and this may be advantageous when automobile costs are rising publication travel entertainment gift and car expenses contains further information on how taxpayers should substantiate expenses i have enclosed the relevant pages from that publication i am sending a similar letter to your colleagues i hope this information is helpful please call me at or robert a berkovsky at if you have any questions sincerely charles o rossotti enclosure


internal_revenue_service department of the treasury number release date index number washington dc person to contact telephone number refer reply to cc corp br4 plr-109915-00 date date distributing controlled sub sub sub sub sub 4a sub sub sub sub sub 8a sub sub sub sub sub 13a sub sub sub sub sub sub sub sub 20a sub sub sub sub sub sub sub sub 27a plr-109915-00 state a country a country b country c country d a b c d e f g h i j k business a business b shareholder a individual a individual b date a date b date c date d year e this letter responds to your date request for rulings on certain federal_income_tax consequences of a proposed transaction the information provided in that request and in later correspondence is summarized below the rulings contained in this letter are based on facts and representations submitted by the taxpayer accompanied by a penalty of perjury statement executed by an appropriate party verification of these facts and representations may be required as part of the audit process plr-109915-00 summary of facts publicly traded distributing is the common parent of an affiliated_group that files a consolidated federal_income_tax return distributing conducts business a and business b through its subsidiaries shareholder a is the only distributing shareholder that owns more than five percent of distributing’s outstanding_stock distributing wholly owns sub sub sub and sub sub wholly owns sub sub sub sub sub sub sub sub and sub sub wholly owns sub sub and sub sub wholly owns sub sub owns all the stock of sub and a percent of sub a country a corporation sub owns the remaining b percent of sub and wholly owns sub a country b corporation sub wholly owns sub 20a a country b limited_company sub and sub both country b corporations sub 20a has elected to be disregarded as separate from sub under sec_301_7701-3 of the procedure and administration regulations sub wholly owns sub which owns c percent of sub a country c_corporation sub wholly owns sub a country d corporation which owns the remaining d percent of sub sub wholly owns sub a country c_corporation sub owns all of the limited_partnership interests in sub which is treated as a partnership under country c law sub 27a a country c_corporation is the designated general_partner of sub sub owns e percent of sub 27a and sub owns the remaining f percent of sub 27a sub 27a has no interest in the profits or losses of sub and is not entitled to receive any assets of sub upon liquidation before date a distributing wholly owned sub 4a before date b sub wholly owned sub 8a and before date c sub wholly owned sub 13a distributing sub sub sub sub sub and sub are holding_companies we have received financial information indicating that business a as conducted directly by each of sub sub sub sub through sub 20a and sub and business b as conducted directly by each of sub sub sub sub sub and sub has each had gross_income and operating_expenses representing the conduct of an active business during each of the past five years on date a sub 4a liquidated into distributing liquidation on date b sub 8a liquidated into sub liquidation and on date c sub 13a liquidated into sub liquidation on date d sub transferred foreign_currency to sub the foreign_currency transfer in year e sub entered into a gain_recognition_agreement gra under sec_1_367_a_-3t of the temporary income_tax regulations when it transferred all the stock of sub to sub business a and business b have markedly different business growth rates capital requirements cash_flow profiles and strategic goals and opportunities these differences have reduced managerial efficiency by creating tensions in important areas such as business growth strategies resource allocation capital structure and employee retention and compensation further because business a has expanded plr-109915-00 rapidly in recent years to represent an increasingly greater proportion of distributing’s total business distributing’s management and board_of directors have had to devote significantly more time and attention to business a and correspondingly less to business b to enable the management of each business to focus exclusively on the needs of its own operation distributing proposes to separate the two businesses in the following series of transactions the mergers i sub will merge into sub merger ii sub will merge into sub merger iii sub will merge into sub merger the country b restructuring iv sub will contribute the stock of sub to sub solely in exchange for sub stock and the assumption by sub of any related liabilities contribution v sub will distribute the stock of sub to sub distribution vi sub will distribute the stock of sub to distributing distribution the country c restructuring vii sub will distribute the stock of sub pro_rata to sub and sub distribution viii to fully separate sub which conducts business b from the business a operations sub will purchase the sub stock owned by sub less than five percent of the sub stock for an amount approximately equal to the stock’s fair_market_value the sub sale ix sub will distribute its c percent interest more than percent in sub to sub distribution x sub will distribute its c percent interest in sub to distributing distribution the u s restructuring plr-109915-00 xi sub or one or more of its controlled_subsidiaries will borrow g dollars under a new bank credit facility the new debt xii sub will use h dollars of the new debt proceeds to repay the existing indebtedness of its subsidiaries under several commercial term_loan facilities and i dollars of the new debt proceeds to repay existing intercompany debt owed by sub and its subsidiaries to distributing and its other subsidiaries the new debt proceeds remaining after satisfaction of the term_loan facilities and the intercompany debt j dollars will be distributed by sub to distributing the cash distribution distributing expects to use the proceeds of the cash distribution to repay part of its existing indebtedness under a revolving credit agreement with a third party lender xiii distributing will contribute the stock of sub and sub to newly formed domestic controlled solely in exchange for controlled stock and the assumption by controlled of any related liabilities contribution xiv distributing will contribute the sub stock to sub in a transaction intended to qualify under sec_351 of the internal_revenue_code xv sub will contribute the stock of sub sub and sub to sub in a transaction intended to qualify under sec_351 xvi sub will contribute the stock of sub sub sub and sub to sub in a transaction intended to qualify under sec_351 xvii distributing will distribute the controlled stock pro_rata to its shareholders distribution but will not issue fractional shares instead the distribution agent will aggregate and sell on the open market all fractional shares and distribute the proceeds to those shareholders otherwise entitled to fractional shares xviii sub will merge with and into distributing the sub merger individual a an officer of distributing and chairman of its board_of directors and individual b an officer of distributing will serve as non-employee directors of controlled following the proposed transactions it is expected that the two individuals will at all times constitute a minority of controlled’s board_of directors and will at no time be involved in the operating aspects of business b distributing and controlled may for transitional purposes enter into certain customary ancillary agreements relating to transitional services data sharing tax sharing and indemnification insurance sharing employee_benefits real_estate intercompany information and the use of certain intellectual_property and intellectual information which agreements other than indemnification provisions would last for not plr-109915-00 more than three years following the proposed transactions collectively the transitional agreements representations merger distributing makes the following representations regarding merger 1a sub on the date of adoption of the plan for merging sub into sub merger plan and at all times until merger is completed will be the owner of at least percent of the single outstanding class of sub stock 1b no shares of sub stock will have been redeemed during the three years preceding the adoption of merger plan 1c merger will occur within a single taxable_year of sub 1d effective as of the date of merger the corporate existence of sub will cease under local law as of that date sub will cease to be a going concern and its activities will be limited to winding up its affairs paying its debts and distributing its remaining assets to its shareholders 1e sub will retain no assets following merger 1f sub will not have acquired assets in any nontaxable_transaction at any time except for acquisitions occurring more than three years before the date of adoption of merger plan 1g no assets of sub have been or will be disposed of by either sub or sub except for dispositions i in the ordinary course of business ii occurring more than three years before the adoption of merger plan and iii pursuant to merger 1h except for merger and distribution merger will not be preceded or followed by the reincorporation in or transfer or sale to a recipient corporation recipient of any of the businesses or assets of sub if persons holding directly or indirectly more than percent in value of the sub stock also hold directly or indirectly more than percent in value of the stock in recipient for purposes of this representation ownership will be determined by application of the constructive_ownership rules of sec_318 as modified by sec_304 1i before the adoption of merger plan no assets of sub will have been distributed in_kind transferred or sold to sub except for i transactions occurring in the normal course of business and ii transactions occurring more than three years before the adoption of merger plan plr-109915-00 1j sub will report all earned_income if any represented by assets that will be deemed distributed to sub such as receivables being reported on a cash_basis unfinished construction contracts commissions due etc 1k the fair_market_value of the assets of sub will exceed its liabilities both at the date of the adoption of merger plan and immediately before the time when merger occurs 1l there is no intercorporate debt existing between sub and sub other than k dollars owed by sub to sub and none has been canceled forgiven or discounted except for transactions that occurred more than three years before the date of adoption of merger plan the k dollars of intercorporate debt owed by sub to sub was incurred in the ordinary course of business 1m sub is not an organization that is exempt from federal_income_tax under sec_501 or any other provision of the code 1n all other transactions undertaken contemporaneously with in anticipation of in conjunction with or in any way related to merger have been fully disclosed merger distributing makes the following representations regarding merger 1o sub on the date of adoption of the plan for merging sub into sub merger plan and at all times until merger is completed will be the owner of at least percent of the single outstanding class of sub stock 1p no shares of sub stock will have been redeemed during the three years preceding the adoption of merger plan 1q merger will occur within a single taxable_year of sub 1r effective as of the date of merger the corporate existence of sub will cease under local law as of that date sub will cease to be a going concern and its activities will be limited to winding up its affairs paying its debts and distributing its remaining assets to its shareholders 1s sub will retain no assets following merger 1t sub will not have acquired assets in any nontaxable_transaction at any time except for acquisitions occurring more than three years before the date of the adoption of merger plan 1u no assets of sub have been or will be disposed of by either sub or plr-109915-00 sub except for dispositions i in the ordinary course of business ii occurring more that three years before the adoption of merger plan and iii pursuant to the proposed transactions described above 1v except for distribution merger will not be preceded or followed by the reincorporation in or transfer or sale to a recipient corporation recipient of any of the businesses or assets of sub if persons holding directly or indirectly more than percent in value of the sub stock also hold directly or indirectly more than percent in value of the stock in recipient for purposes of this representation ownership will be determined by application of the constructive_ownership rules of sec_318 as modified by sec_304 1w before the adoption of merger plan no assets of sub will have been distributed in_kind transferred or sold to sub except for i transactions occurring in the normal course of business and ii transactions occurring more than three years before the adoption of merger plan 1x sub will report all earned_income if any represented by assets that will be deemed distributed to sub such as receivables being reported on a cash_basis unfinished construction contracts commissions due etc 1y the fair_market_value of the assets of sub will exceed its liabilities both at the date of the adoption of merger plan and immediately before the time when merger occurs 1z other than intercompany items incurred in the ordinary course of business there is no intercorporate debt existing between sub and sub and none has been canceled forgiven or discounted except for transactions that occurred more than three years before the date of adoption of merger plan 2a sub is not an organization that is exempt from federal_income_tax under sec_501 or any other provision of the code 2b all other transactions undertaken contemporaneously with in anticipation of in conjunction with or in any way related to merger have been fully disclosed merger distributing makes the following representations regarding merger 2c sub on the date of the adoption of the plan for merging sub into sub merger plan and at all times until merger is completed will be the owner of at least percent of the single outstanding class of sub stock 2d no shares of sub stock will have been redeemed during the three years plr-109915-00 preceding the adoption of merger plan 2e merger will occur within a single taxable_year of sub 2f effective as of the date of merger the corporate existence of sub will cease under local law as of that date sub will cease to be a going concern and its activities will be limited to winding up its affairs paying its debts and distributing its remaining assets to its shareholders 2g sub will retain no assets following merger 2h sub will not have acquired assets in any nontaxable_transaction at any time except for acquisitions occurring more than three years before the date of the adoption of merger plan 2i no assets of sub have been or will be disposed of by either sub or sub except for dispositions i in the ordinary course of business ii occurring more that three years before the adoption of merger plan and iii pursuant to the proposed transactions described above 2j merger will not be preceded or followed by the reincorporation in or transfer or sale to a recipient corporation recipient of any of the businesses or assets of sub if persons holding directly or indirectly more than percent in value of the sub stock also hold directly or indirectly more than percent in value of the stock in recipient for purposes of this representation ownership will be determined by application of the constructive_ownership rules of sec_318 as modified by sec_304 2k before the adoption of merger plan no assets of sub will have been distributed in_kind transferred or sold to sub except for i transactions occurring in the normal course of business and ii transactions occurring more than three years before the adoption of merger plan 2l sub will report all earned_income if any represented by assets that will be deemed distributed to sub such as receivables being reported on a cash_basis unfinished construction contracts commissions due etc 2m the fair_market_value of the assets of sub will exceed its liabilities both at the date of the adoption of merger plan and immediately before the time when merger occurs 2n other than intercompany items incurred in the ordinary course of business there is no intercorporate debt existing between sub and sub and none has been canceled forgiven or discounted except for transactions that occurred more than three years before the date of the adoption of merger plan plr-109915-00 2o sub is not an organization that is exempt from federal_income_tax under sec_501 or any other provision of the code 2p all other transactions undertaken contemporaneously with in anticipation of in conjunction with or in any way related to merger have been fully disclosed the country b restructuring contribution and distribution distributing makes the following representations regarding contribution and distribution 2q any indebtedness owed by sub to sub after distribution will not constitute stock_or_securities 2r no part of the consideration distributed by sub will be received by sub as a creditor employee or in any capacity other than that of a shareholder of sub 2s the five years of financial information submitted on behalf of sub represents sub 20's present operation and there have been no substantial operational changes since the date of the last financial statements submitted 2t the five years of financial information submitted on behalf of sub represents sub 21's present operation and there have been no substantial operational changes since the date of the last financial statements submitted 2u following distribution sub and sub will each continue the active_conduct of its business independently and with its separate employees 2v distribution is carried out to facilitate distribution the corporate business_purpose for which is to enhance the future success of each of business a and business b by resolving substantial problems that have evolved as a result of and are exacerbated by the operation of both businesses within a single affiliated_group_of_corporations distribution is motivated in whole or substantial part by this corporate business_purpose 2w there is no plan or intention by sub to sell exchange transfer by gift or otherwise dispose_of any of its stock in or securities of either sub or sub after the transaction except in distribution 2x there is no plan or intention by either sub or sub directly or through any subsidiary_corporation to purchase any of its outstanding_stock after the transaction other than through stock purchases meeting the requirements of sec_4 b of revproc_96_30 1996_1_cb_696 plr-109915-00 2y there is no plan or intention to liquidate either sub or sub to merge either corporation with any other corporation or to sell or otherwise dispose_of the assets of either corporation after distribution except i in the ordinary course of business and ii in the proposed transactions described above however existing or newly formed subsidiaries of sub or sub or sub or sub itself may seek to acquire related businesses and some of these acquisitions may be structured as mergers 2z no liabilities will be assumed as determined under sec_357 by sub in connection with the proposed transaction 3a no intercorporate debt will exist between sub and sub at the time of after distribution other than any indebtedness incurred in the ordinary course or for obligations resulting from the transitional agreements 3b payments made in any continuing transactions between sub and sub will be for fair_market_value based on terms and conditions arrived at by the parties bargaining at arm's length except for certain payments to be made under the transitional agreements 3c no two parties to the transaction are investment companies as defined in sec_368 and iv 3d immediately after distribution the gross assets of the businesses actively conducted as defined in sec_355 by each of sub and sub will have a fair_market_value equal to at least five percent of the total fair_market_value of the corporation's gross assets 3e distribution is not part of a plan or series of related transactions within the meaning of sec_355 pursuant to which one or more persons will acquire directly or indirectly stock possessing percent or more of the total combined voting power of all classes of stock of sub or sub entitled to vote or stock possessing percent or more of the total value of all classes of stock of sub or sub 3f for purposes of sec_355 immediately after distribution no person determined after applying sec_355 will hold stock possessing percent of more of the total combined voting power of all classes of sub stock entitled to vote or percent or more of the total value of shares of all classes of sub stock that was acquired by purchase as defined in sec_355 and during the five-year period determined after applying sec_355 ending on the date of distribution 3g for purposes of sec_355 immediately after distribution no person determined after applying sec_355 will hold stock possessing percent or more of stock entitled to vote or the total combined voting power of all classes of percent or more of the total value of shares of all classes of sub stock that was plr-109915-00 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 distributing or ii attributable to distributions on sub stock that was acquired by purchase as defined in sec_355 and during the five-year period determined after applying sec_355 ending on the date of distribution distribution the following representations are made regarding distribution 3h any indebtedness owed by sub to sub after distribution will not constitute stock_or_securities 3i no part of the consideration distributed by sub will be received by distributing as a creditor employee or in any capacity other than that of a shareholder of sub 3j immediately after distribution at least percent of the fair_market_value of the gross assets of sub will consist of the stock and securities of controlled corporations that are engaged in the active_conduct_of_a_trade_or_business as defined in sec_355 3k immediately after distribution at least percent of the fair_market_value of the gross assets of sub will consist of the stock and securities of a controlled_corporation sub that is engaged in the active_conduct_of_a_trade_or_business as defined in sec_355 3l the five years of financial information submitted on behalf of sub sub sub which are all wholly owned subsidiaries of sub and together with sub will in the aggregate represent at least percent of the fair_market_value of the gross assets of sub immediately after distribution and sub which is a wholly owned subsidiary of sub and will represent at least percent of the fair_market_value of the gross assets of sub immediately after distribution represents their present respective operations and with regard to each corporation there have been no substantial operational changes since the date of the last financial statements submitted 3m the five years of financial information submitted on behalf of sub represents sub 20's present operation and there have been no substantial operational changes since the date of the last financial statements submitted 3n following distribution sub through controlled_subsidiaries and sub will each continue the active_conduct of its business independently and with its separate employees plr-109915-00 3o distribution is carried out to facilitate distribution the corporate business_purpose for which is to enhance the future success of each of business a and business b by resolving substantial problems that have evolved as a result of and are exacerbated by the operation of both businesses within a single affiliated_group_of_corporations distribution is motivated in whole or substantial part by this corporate business_purpose 3p there is no plan or intention by distributing to sell exchange transfer by gift or otherwise dispose_of any of its stock in or securities of either sub or sub after the transaction except in contribution and distribution 3q there is no plan or intention by either sub or sub directly or through any subsidiary_corporation to purchase any of its outstanding_stock after the transaction other than through stock purchases meeting the requirements of sec_4 b of revproc_96_30 3r there is no plan or intention to liquidate either sub or sub to merge either corporation with any other corporation or to sell or otherwise dispose_of the assets of either corporation after distribution except i in the ordinary course of business and ii in contribution and distribution however existing or newly formed subsidiaries of sub or sub or sub or sub itself may seek to acquire related businesses and some of these acquisitions may be structured as mergers 3s no intercorporate debt will exist between sub and sub at the time of or after distribution other than any indebtedness incurred in the ordinary course or for obligations resulting from the transitional agreements 3t payments made in any continuing transactions between sub and sub will be for fair_market_value based on terms and conditions arrived at by the parties bargaining at arm’s length except for certain payments to be made under the transitional agreements 3u immediately after distribution the gross assets of the businesses actively conducted as defined in sec_355 by each of sub sub sub which are all wholly owned subsidiaries of sub and together with sub will in the aggregate represent at least percent of the fair_market_value of the gross assets of sub immediately after distribution and sub which is a wholly owned subsidiary of sub and will represent at least percent of the fair_market_value of the gross assets of sub immediately after distribution will have a fair_market_value equal to at least five percent of the total fair_market_value of the corporation's gross assets 3v immediately after distribution the gross assets of the business actively conducted as defined in sec_355 by sub will have a fair_market_value equal to at least five percent of the total fair_market_value of the corporation's gross assets plr-109915-00 3w distribution is not part of a plan or series of related transactions within the meaning of sec_355 pursuant to which one or more persons will acquire directly or indirectly stock possessing percent or more of the total combined voting power of all classes of stock of sub or sub entitled to vote or stock possessing percent or more of the total value of all classes of stock of sub or sub 3x for purposes of sec_355 immediately after distribution no person determined after applying sec_355 will hold stock possessing percent of more of the total combined voting power of all classes of sub stock entitled to vote or percent or more of the total value of shares of all classes of sub stock that was acquired by purchase as defined in sec_355 and during the five-year period determined after applying sec_355 ending on the date of distribution 3y for purposes of sec_355 immediately after 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 sub stock entitled to vote or percent or more of the total value of shares of all classes of sub 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 distributing or ii attributable to distributions on sub stock that was acquired by purchase as defined in sec_355 and during the five-year period determined after applying sec_355 ending on the date of distribution the country c restructuring distribution distributing makes the following representations regarding distribution 3z any indebtedness owed by sub to sub after distribution will not constitute stock_or_securities 4a no part of the consideration distributed by sub will be received by sub or sub as a creditor employee or in any capacity other than that of a shareholder of sub 4b the five years of financial information submitted on behalf of sub represents sub 24's present operation and there have been no substantial operational changes since the date of the last financial statements submitted 4c the five years of financial information submitted on behalf of sub represents sub 25's present operation and there have been no substantial operational changes since the date of the last financial statements submitted 4d following distribution sub and sub will each continue the active plr-109915-00 conduct of its business independently and with its separate employees 4e distribution is carried out to facilitate distribution the corporate business_purpose for which is to enhance the future success of each of business a and business b by resolving substantial problems that have evolved as a result of and are exacerbated by the operation of both businesses within a single affiliated_group_of_corporations distribution is motivated in whole or substantial part by this corporate business_purpose 4f there is no plan or intention by sub or sub to sell exchange transfer by gift or otherwise dispose_of any of its stock in or securities of either sub or sub after distribution except in i the sub sale ii distribution iii distribution and iv distribution 4g there is no plan or intention by either sub or sub directly or through any subsidiary_corporation to purchase any of its outstanding_stock after the transaction other than through stock purchases meeting the requirements of sec_4 b of revproc_96_30 4h there is no plan or intention to liquidate either sub or sub to merge either corporation with any other corporation or to sell or otherwise dispose_of the assets of either corporation after distribution except i in the ordinary course of business and ii in the proposed transactions described above however existing or newly formed subsidiaries of sub or sub or sub or sub itself may seek to acquire related businesses and some of these acquisitions may be structured as mergers 4i no intercorporate debt will exist between sub and sub at the time of or after distribution other than any indebtedness incurred in the ordinary course or for obligations resulting from the transitional agreements 4j payments made in any continuing transactions between sub and sub will be for fair_market_value based on terms and conditions arrived at by the parties bargaining at arm’s length except for certain payments to be made under the transitional agreements 4kl immediately after distribution the gross assets of the businesses actively conducted as defined in sec_355 by each of sub and sub will have a fair_market_value equal to at least five percent of the total fair_market_value of the corporation's gross assets 4m distribution is not part of a plan or series of related transactions within the meaning of sec_355 pursuant to which one or more persons will acquire directly or indirectly stock possessing percent or more of the total combined voting power of all classes of stock of sub or sub entitled to vote or stock possessing percent or plr-109915-00 more of the total value of all classes of stock of sub or sub 4n for purposes of sec_355 immediately after distribution no person determined after applying sec_355 will hold stock possessing percent of more of the total combined voting power of all classes of sub stock entitled to vote or percent or more of the total value of shares of all classes of sub stock that was acquired by purchase as defined in sec_355 and during the five-year period determined after applying sec_355 ending on the date of distribution 4o for purposes of sec_355 immediately after 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 sub stock entitled to vote or percent or more of the total value of shares of all classes of sub 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 distributing or ii attributable to distributions on sub stock that was acquired by purchase as defined in sec_355 and during the five-year period determined after applying sec_355 ending on the date of distribution distribution distributing makes the following representations regarding distribution 4p any indebtedness owed by sub to sub after distribution will not constitute stock_or_securities 4q no part of the consideration distributed by sub will be received by sub as a creditor employee or in any capacity other than that of a shareholder of sub 4r the five years of financial information submitted on behalf of sub represents sub 16's present operation and there have been no substantial operational changes since the date of the last financial statements submitted 4s the five years of financial information submitted on behalf of sub represents sub 24's present operation and there have been no substantial operational changes since the date of the last financial statements submitted 4t following distribution sub and sub will each continue the active_conduct of its business independently and with its separate employees 4u distribution is carried out to facilitate distribution the corporate business_purpose for which is to enhance the future success of each of business a and business b by resolving substantial problems that have evolved as a result of and are exacerbated by the operation of both businesses within a single affiliated_group_of_corporations distribution is motivated in whole or substantial part by this corporate plr-109915-00 business_purpose 4v there is no plan or intention by sub to sell exchange transfer by gift or otherwise dispose_of any of its stock in or securities of either sub or sub after distribution except in distribution and distribution 4w there is no plan or intention by either sub or sub directly or through any subsidiary_corporation to purchase any of its outstanding_stock after the transaction other than through stock purchases meeting the requirements of sec_4 b of revproc_96_30 4x there is no plan or intention to liquidate either sub or sub to merge either corporation with any other corporation or to sell or otherwise dispose_of the assets of either corporation after distribution except i in the ordinary course of business and ii in the proposed transactions described above however existing or newly formed subsidiaries of sub or sub or sub or sub itself may seek to acquire related businesses and some of these acquisitions may be structured as mergers 4y no intercorporate debt will exist between sub and sub at the time of or after distribution other than any indebtedness incurred in the ordinary course or for obligations resulting from the transitional agreements 4z payments made in any continuing transactions between sub and sub will be for fair_market_value based on terms and conditions arrived at by the parties bargaining at arm’s length except for certain payments to be made under the transitional agreements 5ab immediately after distribution the gross assets of the businesses actively conducted as defined in sec_355 by each of sub and sub will have a fair_market_value equal to at least five percent of the total fair_market_value of the corporation's gross assets 5c distribution is not part of a plan or series of related transactions within the meaning of sec_355 pursuant to which one or more persons will acquire directly or indirectly stock possessing percent or more of the combined voting power of all classes of stock of sub or sub entitled to vote or stock possessing percent or more of the total value of all classes of stock of sub or sub 5d for purposes of sec_355 immediately after distribution no person determined after applying sec_355 will hold stock possessing percent of more of the total combined voting power of all classes of sub stock entitled to vote or percent or more of the total value of shares of all classes of sub stock that was acquired by purchase as defined in sec_355 and during the five-year period determined after applying sec_355 ending on the date of distribution plr-109915-00 5e for purposes of sec_355 immediately after 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 sub stock entitled to vote or percent or more of the total value of shares of all classes of sub 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 distributing or ii attributable to distributions on sub stock that was acquired by purchase as defined in sec_355 and during the five-year period determined after applying sec_355 ending on the date of distribution distribution distributing makes the following representations regarding distribution 5f any indebtedness owed by sub to sub after distribution will not constitute stock_or_securities 5g no part of the consideration distributed by sub will be received by distributing as a creditor employee or in any capacity other than that of a shareholder of sub 5h immediately after distribution at least percent of the fair_market_value of the gross assets of sub will consist of the stock and securities of controlled corporations that are engaged in the active_conduct_of_a_trade_or_business as defined in sec_355 5i immediately after distribution at least percent of the fair_market_value of the gross assets of sub will consist of the stock and securities of controlled corporations that are engaged in the active_conduct_of_a_trade_or_business as defined in sec_355 5j the five years of financial information submitted on behalf of sub sub sub which are all wholly owned subsidiaries of sub and together with sub will in the aggregate represent at least percent of the fair_market_value of the gross assets of sub immediately after distribution and sub which is a wholly owned subsidiary of sub and will represent at least percent of the fair_market_value of the gross assets of sub immediately after distribution represent their present respective operations and with regard to each corporation there have been no substantial operational changes since the date of the last financial statements submitted 5k the five years of financial information submitted on behalf of sub represents sub 24's present operation and there have been no substantial operational changes since the date of the last financial statements submitted plr-109915-00 5l following distribution sub through controlled_subsidiaries and sub will each continue the active_conduct of its business independently and with its separate employees 5m distribution is carried out to facilitate distribution the corporate business_purpose for which is to enhance the future success of each of business a and business b by resolving substantial problems that have evolved as a result of and are exacerbated by the operation of both businesses within a single affiliated_group_of_corporations distribution is motivated in whole or substantial part by this corporate business_purpose 5n there is no plan or intention by distributing to sell exchange transfer by gift or otherwise dispose_of any of its stock in or securities of either sub or sub after the transaction except in contribution and distribution 5o there is no plan or intention by either sub or sub directly or through any subsidiary_corporation to purchase any of its outstanding_stock after the transaction other than through stock purchases meeting the requirements of sec_4 b of revproc_96_30 5p there is no plan or intention to liquidate either sub or sub to merge either corporation with any other corporation or to sell or otherwise dispose_of the assets of either corporation after distribution except i in the ordinary course of business and ii in contribution and distribution however existing or newly formed subsidiaries of sub or sub or sub or sub itself may seek to acquire related businesses and some of these acquisitions may be structured as mergers 5q no intercorporate debt will exist between sub and sub at the time of or after distribution other than any indebtedness incurred in the ordinary course or for obligations resulting from the transitional agreements 5r payments made in any continuing transactions between sub and sub will be for fair_market_value based on terms and conditions arrived at by the parties bargaining at arm’s length except for certain payments to be made pursuant to the transitional agreements 5st immediately after distribution the gross assets of the businesses actively conducted as defined in sec_355 by each of sub sub sub which are all wholly owned subsidiaries of sub and together with sub will in the aggregate represent at least percent of the fair_market_value of the gross assets of sub immediately after distribution and sub which is a wholly owned subsidiary of sub and will represent at least percent of the fair_market_value of the gross assets of sub immediately after distribution will have a fair_market_value equal to at least five percent of the total fair_market_value of the corporation's gross assets plr-109915-00 5u immediately after distribution the gross assets of the business actively conducted as defined in sec_355 by sub will have a fair_market_value equal to at least five percent of the total fair_market_value of the corporation's gross assets 5v distribution is not part of a plan or series of related transactions within the meaning of sec_355 pursuant to which one or more persons will acquire directly or indirectly stock possessing percent or more of the total combined voting power of all classes of stock of sub or sub entitled to vote or stock possessing percent or more of the total value of all classes of stock of sub or sub 5w for purposes of sec_355 immediately after distribution no person determined after applying sec_355 will hold stock possessing percent of more of the total combined voting power of all classes of sub stock entitled to vote or percent or more of the total value of shares of all classes of sub stock that was acquired by purchase as defined in sec_355 and during the five-year period determined after applying sec_355 ending on the date of distribution 5x for purposes of sec_355 immediately after 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 sub stock entitled to vote or percent or more of the total value of shares of all classes of sub 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 distributing or ii attributable to distributions on sub stock that was acquired by purchase as defined in sec_355 and during the five-year period determined after applying sec_355 ending on the date of distribution the u s restructuring distributing makes the following representations regarding the contributions described above in steps xiv xv and xvi 5y the contribution by distributing of the stock of sub to sub will qualify as a transaction described in sec_351 5z the contribution by sub of the stock of each of sub sub and sub to sub will qualify as a transaction described in sec_351 6a the contribution by sub of the stock of each of sub sub sub and sub to sub will qualify as a transaction described in sec_351 contribution and distribution distributing makes the following representations regarding contribution and distribution plr-109915-00 6b any indebtedness owed by controlled to distributing after distribution will not constitute stock_or_securities 6c no part of the consideration distributed by distributing will be received by a shareholder as a creditor employee or in any capacity other than that of a shareholder of distributing 6d immediately after distribution at least percent of the fair_market_value of the gross assets of distributing will consist of the stock and securities of sub sub and sub each of which is a controlled_corporation engaged in the active_conduct_of_a_trade_or_business as defined in sec_355 6e immediately after distribution at least percent of the fair_market_value of the gross assets of sub will consist of the stock and securities of sub sub and sub each of which is a controlled_corporation engaged in the active_conduct_of_a_trade_or_business as defined in sec_355 6f the five years of financial information submitted on behalf of sub sub sub sub and sub represents the present operations of each corporation and with regard to each there have been no substantial operational changes since the date of the last financial statements submitted 6g immediately after distribution at least percent of the fair_market_value of the gross assets of controlled will consist of the stock and securities of sub and sub each of which is a controlled_corporation engaged in the active_conduct_of_a_trade_or_business as defined in sec_355 6h immediately after distribution at least percent of the fair_market_value of the gross assets of sub will consist of the stock and securities of sub sub sub and sub each of which is a controlled_corporation engaged in the active_conduct_of_a_trade_or_business as defined in sec_355 6j the five years of financial information submitted on behalf of sub sub sub sub and sub represents the operations of each corporation and with regard to each there have been no substantial operational changes since the date of the last financial statements submitted 6k following distribution distributing and controlled through controlled_subsidiaries will each continue the active_conduct of its business independently and with its separate employees plr-109915-00 6l distribution is carried out for the corporate business_purpose of enhancing the future success of each of business a and business b by resolving substantial problems that have evolved as a result of and are exacerbated by the operation of both businesses within a single affiliated_group_of_corporations distribution is motivated in whole or substantial part by this corporate business_purpose 6m there is no plan or intention by any shareholder who owns five percent or more of the stock of distributing and the management of distributing to its best knowledge is not aware of any plan or intention on the part of any particular remaining shareholder or security holder of distributing to sell exchange transfer by gift or otherwise dispose_of any stock in or securities of either distributing or controlled after distribution 6n there is no plan or intention by either distributing or controlled directly or through any subsidiary_corporation to purchase any of its outstanding_stock after the transaction other than through stock purchases meeting the requirements of sec_4 b of revproc_96_30 6o there is no plan or intention to liquidate either distributing or controlled to merge either corporation with any other corporation or to sell or otherwise dispose_of the assets of either corporation after distribution except in the ordinary course of business however existing or newly formed subsidiaries of distributing or controlled or distributing or controlled itself may seek to acquire related businesses and some of these acquisitions may be structured as mergers 6p no liabilities will be assumed as determined under sec_357 by controlled in connection with the proposed transaction 6q no intercorporate debt will exist between distributing and controlled at the time of or after distribution other than any indebtedness incurred in the ordinary course or for obligations resulting from the transitional agreements 6r immediately before 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 of the income_tax regulations 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 further any excess_loss_account distributing may have in the controlled stock will be included in income immediately before distribution to the extent required by applicable regulations sec_1_1502-19 6s payments made in any 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 except for certain payments to be made pursuant to the transitional agreements plr-109915-00 6t no two parties to the transaction are investment companies as defined in sec_368 and iv 6u immediately after distribution the gross assets of the businesses actively conducted as defined in sec_355 by each of sub sub sub sub and sub will have a fair_market_value equal to at least five percent of the total fair_market_value of the corporation's gross assets 6v immediately after distribution the gross assets of the businesses actively conducted as defined in sec_355 by each of sub sub sub sub and sub will have a fair_market_value equal to at least five percent of the total fair_market_value of the corporation's gross assets 6w distribution is not part of a plan or series of related transactions within the meaning of sec_355 pursuant to which one or more persons will acquire directly or indirectly stock possessing percent or more of the total combined voting power of all classes of stock of distributing or controlled entitled to vote or stock possessing percent or more of the total value of all classes of stock of distributing or controlled 6x for purposes of sec_355 immediately after distribution no person determined after applying sec_355 will hold stock possessing percent of more of the total combined voting power of all classes of distributing stock entitled to vote or percent or more of the total value of shares of all classes of distributing stock that was acquired by purchase as defined in sec_355 and during the five-year period determined after applying sec_355 ending on the date of distribution 6y for purposes of sec_355 immediately after 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 distributing or ii attributable to distributions on distributing stock that was acquired by purchase as defined in sec_355 and during the five-year period determined after applying sec_355 ending on the date of distribution 6z the payment of cash in lieu of fractional shares of controlled will be solely for the purpose of avoiding the expense and inconvenience to controlled of issuing fractional shares and does not represent separately bargained for consideration the total cash consideration that will be paid in the transaction to the distributing shareholders will not exceed one percent of the total consideration that will be distributed in the proposed transaction the fractional share interests in controlled of distributing shareholders will be aggregated and no distributing shareholder will receive cash in an amount equal to or greater than the value of one full share of controlled stock plr-109915-00 international 7a each of sub sub sub sub sub and sub is a controlled_foreign_corporation under sec_957 each of sub 8a and sub 13a was a controlled_foreign_corporation under sec_957 before its liquidation 7b none of sub sub sub sub sub and sub has been or will be a united_states_real_property_holding_corporation as defined in sec_897 at any time during the five-year period immediately preceding the date of any of distribution sec_1 through and none will be a united_states_real_property_holding_corporation immediately thereafter neither sub 8a nor sub 13a was a united_states_real_property_holding_corporation at any time during the five-year period immediately preceding the date of its liquidation 7c none of sub sub sub sub sub and sub has been or will be a passive_foreign_investment_company as defined in sec_1297 or a foreign_personal_holding_company as defined in sec_552 on the date immediately preceding any of distribution sec_1 through and none will be a passive_foreign_investment_company or a foreign_personal_holding_company immediately thereafter neither sub 8a nor sub 13a was a passive_foreign_investment_company or a foreign_personal_holding_company on the date immediately preceding its liquidation rulings merger based solely on the information submitted and the representations set forth above we rule as follows on merger for federal_income_tax purposes merger will be treated as a distribution by sub of all its assets to sub in complete_liquidation under sec_332 sec_1_332-2 no gain_or_loss will be recognized by sub on its receipt of the sub assets and liabilities in merger sec_332 no gain_or_loss will be recognized by sub on the distribution of its assets and liabilities to sub in merger sec_336 and sec_337 the basis of each sub asset in the hands of sub will equal the basis of that asset in the hands of sub immediately before merger sec_334 the holding_period of each sub asset received by sub will include the period during which sub held the asset sec_1223 sub will succeed to and take into account the items of sub described plr-109915-00 in sec_381 subject_to the provisions and limitations of sec_381 and c and the regulations thereunder sec_381 and sec_1_381_a_-1 sub will succeed to and take into account the earnings_and_profits of sub as of the date of merger sec_381 and sec_1_381_c_2_-1 any deficit in earnings_and_profits of sub or sub will be used only to offset earnings_and_profits accumulated after the date of merger sec_381 merger based solely on the information submitted and the representations set forth above we rule as follows on merger for federal_income_tax purposes merger will be treated as a distribution by sub of all its assets to sub in complete_liquidation under sec_332 sec_1_332-2 no gain_or_loss will be recognized by sub on its receipt of the sub assets and liabilities in merger sec_332 a no gain_or_loss will be recognized by sub on the distribution of its assets and liabilities to sub in merger sec_336 and sec_337 the basis of each sub asset in the hands of sub will equal the basis of that asset in the hands of sub immediately before merger sec_334 the holding_period of each sub asset received by sub will include the period during which sub held the asset sec_1223 sub will succeed to and take into account the items of sub described in sec_381 subject_to the provisions and limitations of sec_381 and c and the regulations thereunder sec_381 and sec_1_381_a_-1 sub will succeed to and take into account the earnings_and_profits of sub as of the date of merger sec_381 and sec_1_381_c_2_-1 any deficit in earnings_and_profits of sub or sub will be used only to offset earnings_and_profits accumulated after the date of merger sec_381 merger based solely on the information submitted and the representations set forth above we rule as follows on merger for federal_income_tax purposes merger will be treated as a distribution by sub of all its assets to sub in complete_liquidation under sec_332 sec_1_332-2 plr-109915-00 no gain_or_loss will be recognized by sub on its receipt of the sub assets and liabilities in merger sec_332 a no gain_or_loss will be recognized by sub on the distribution of its assets and liabilities to sub in merger sec_336 and sec_337 the basis of each sub asset in the hands of sub will equal the basis of that asset in the hands of sub immediately before merger sec_334 the holding_period of each sub asset received by sub will include the period during which sub held the asset sec_1223 sub16 will succeed to and take into account the items of sub described in sec_381 subject_to the provisions and limitations of sec_381 and c and the regulations thereunder sec_381 and sec_1_381_a_-1 sub will succeed to and take into account the earnings_and_profits of sub as of the date of merger sec_381 and sec_1_381_c_2_-1 any deficit in earnings_and_profits of sub or sub will be used only to offset earnings_and_profits accumulated after the date of merger sec_381 the country b restructuring distribution based solely on the information submitted and the representations set forth above we rule as follows on contribution and distribution contribution followed by distribution will be a reorganization under sec_368 sub and sub each will be a_party_to_a_reorganization under sec_368 no gain_or_loss will be recognized by sub on contribution sec_361 and sec_357 no gain_or_loss will be recognized by sub on contribution sec_1032 no gain_or_loss will be recognized by and no amount will otherwise be included in the income of sub on distribution sec_355 no gain_or_loss will be recognized by sub on distribution sec_361 the basis of the sub stock received by sub will equal the basis of that stock in the hands of sub immediately before contribution sec_362 plr-109915-00 the holding_period of the sub stock received by sub in contribution will include the period during which such stock was held by sub sec_1223 the holding_period for the sub stock received by sub in distribution will include the holding_period of the sub stock upon which the distribution is made provided the sub stock is held as a capital_asset on the date of distribution sec_1223 distribution based solely on the information submitted and the representations set forth above we rule as follows on distribution no gain_or_loss will be recognized by sub on distribution sec_355 no gain_or_loss will be recognized by and no amount will otherwise be included in the income of distributing on distribution sec_355 the holding_period for the sub stock received by distributing in distribution will include the holding_period of the sub stock upon which the distribution is made provided the sub stock is held as a capital_asset on the date of distribution sec_1223 the country c restructuring distribution based solely on the information submitted and the representations set forth above we rule as follows on distribution no gain_or_loss will be recognized by sub on distribution sec_355 no gain_or_loss will be recognized by and no amount will otherwise be included in the income of sub or sub on distribution sec_355 the holding_period for the sub stock received by sub and sub in distribution will include the holding_period of the sub stock upon which the distribution is made provided the sub stock is held as a capital_asset on the date of distribution sec_1223 distribution based solely on the information submitted and the representations set forth above we rule as follows on distribution plr-109915-00 no gain_or_loss will be recognized by sub on distribution sec_355 no gain_or_loss will be recognized by and no amount will otherwise be included in the income of sub on distribution sec_355 the holding_period for the sub stock received by sub in distribution will include the holding_period of the sub stock upon which the distribution is made provided the sub stock is held as a capital_asset on the date of distribution sec_1223 distribution based solely on the information submitted and the representations set forth above we rule as follows on distribution no gain_or_loss will be recognized by sub on distribution sec_355 no gain_or_loss will be recognized by and no amount will otherwise be included in the income of distributing on distribution sec_355 the holding_period for the sub stock received by distributing in distribution will include the holding_period of the sub stock upon which the distribution is made provided the sub stock is held as a capital_asset on the date of distribution sec_1223 the u s restructuring contribution and distribution based solely on the information submitted and the representations set forth above we rule as follows on contribution and distribution contribution followed by distribution will qualify as a reorganization under sec_368 distributing and controlled each will be a party to the reorganization under sec_368 no gain_or_loss will be recognized by distributing on contribution sec_361 and sec_357 no gain_or_loss will be recognized by controlled on contribution sec_1032 no gain_or_loss will be recognized by and no amount will otherwise be included in the income of the shareholders of distributing on distribution sec_355 plr-109915-00 no gain_or_loss will be recognized by distributing on distribution sec_361 the basis of the sub stock and the sub stock received by controlled will equal the basis of the stock in the hands of distributing immediately before contribution sec_362 the holding_period of the sub stock and the sub stock received by controlled will include the period during which the stock was held by distributing sec_1223 the aggregate basis of the distributing stock and the controlled stock in the hands of each distributing shareholder immediately after distribution will equal the aggregate basis of distributing stock held by the shareholder immediately before distribution allocated between the distributing stock and controlled stock in proportion to the fair_market_value of each in accordance with sec_1_358-2 sec_358 the holding_period of the controlled stock received by each shareholder in distribution will include the holding_period of the distributing stock upon which the distribution is made provided the distributing stock is held as a capital_asset on the date of distribution sec_1223 the earnings_and_profits of distributing and controlled will be allocated in accordance with sec_312 sec_1_312-10 and sec_1_1502-33 the payment of cash if any in lieu of fractional shares of controlled stock will be treated for federal_income_tax purposes as if the fractional shares had been distributed as part of distribution and then had been sold by the holders accordingly a shareholder will recognize gain_or_loss equal to the difference between the cash received and the basis of the fractional share as determined in ruling above sec_1001 if the controlled stock is held by the shareholder as a capital_asset the gain_or_loss will be subject_to the provisions and limitations of subchapter_p of chapter of the code sec_1221 and sec_1222 the cash distribution the cash distribution will be a distribution under sec_301 international immediately following distribution the basis of the stock of sub in the hands of distributing will be the lesser_of the adjusted_basis of the sub stock in the hands of sub or the substituted_basis allocated to the sub stock in accordance with sec_1_358-2 sec_1248 notice_87_64 c b plr-109915-00 immediately following distribution distributing’s holding_period in the sub stock received in the sec_355 distribution will be the greater of the holding_period of the sub stock in the hands of sub or the holding_period of the sub stock in the hands of distributing immediately following distribution the basis of the stock of sub in the hands of sub will be the lesser_of the adjusted_basis of the sub stock in the hands of sub or the substituted_basis allocated to the sub stock in accordance with sec_1_358-2 sec_1248 notice immediately following distribution sub 2’s holding_period in the sub stock received in the sec_355 distribution will be the greater of the holding_period of the sub stock in the hands of sub or the holding_period of the sub stock in the hands of sub immediately following distribution the basis of the stock of sub in the hands of distributing will be the lesser_of the adjusted_basis of the sub stock in the hands of sub or the substituted_basis allocated to the sub stock in accordance with sec_1_358-2 sec_1248 notice immediately following distribution distributing’s holding_period in the sub stock received in the sec_355 distribution will be the greater of the holding_period of the sub stock in the hands of sub or the holding_period of the sub stock in the hands of distributing caveats we express no opinion about the tax treatment of the transactions under any other provisions of the code or regulations or the tax treatment of any conditions existing at the time of or effects resulting from the transactions that are not specifically covered by the above rulings in particular no opinion is expressed concerning a the application of sec_304 or sec_367 to the sub sale b whether the contribution by distributing of sub stock to sub described above in step xiv qualifies under sec_351 c whether the contribution by sub of the stock of sub sub and sub to sub described in step xv qualifies under sec_351 d whether the contribution by sub of the stock of sub sub sub and sub to sub described in step xvi qualifies under sec_351 e the treatment of non-fair market_value payments described in steps 3b 3t 4j 4z 5r and 6s plr-109915-00 f the effect of distribution on the gra under sec_367 sec_1_367_a_-3t and sec_1_367_a_-3 g the classification of sub 20a and sub under sec_7701 and sec_301_7701-3 h the application of sec_367 and sec_1_367_a_-5t d to the foreign_currency transfer j the application of sec_367 and sec_1_367_b_-3 to liquidation liquidation or liquidation k the possible income inclusions and basis reductions that may occur because of the application of sec_1_367_b_-5 to the distributions designated_distribution and distribution l the sub merger procedural statements this ruling is directed only to the taxpayer who requested it sec_6110 provides that it may not be used or cited as precedent a copy of this ruling letter should be attached to the federal_income_tax return of each taxpayer involved for the taxable_year in which the transactions are consummated under the power_of_attorney on file in this office a copy of this letter is being sent to the taxpayer sincerely yours assistant chief_counsel corporate by wayne t murray senior technician reviewer branch


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 psi b01 plr-149705-08 date date x ------------------------- --------------------------------------------------- member ----------------------------------------------------- ---------------------- country d1 dear -------------- ---------------------------------------- ------------------- this letter responds to a letter dated date submitted on behalf of x by its authorized representative requesting a ruling under sec_301_9100-1 and sec_301_9100-3 of the procedure and administration regulations that x be granted an extension of time to file an election to be classified as a disregarded_entity under sec_301_7701-3 effective d1 facts the information submitted states that x was formed on d1 as a limited_liability_company under the laws of country x was formed and wholly owned by member member intended that x be treated as a disregarded_entity for federal tax purposes effective d1 however due to inadvertence x failed to file a timely form_8832 entity classification election law and analysis plr-149705-08 sec_301_7701-3 provides that a business_entity that is not classified as a corporation under sec_301_7701-2 or an eligible_entity can elect its classification for federal tax purposes as provided in sec_301_7701-3 sec_301_7701-3 provides that unless it elects otherwise a foreign eligible_entity is a a partnership if it has two or more members and at least one member does not have limited_liability b an association if all members have limited_liability or c disregarded as an entity separate from its owner if it has a single owner that does not have limited_liability sec_301_7701-3 provides that an eligible_entity may elect to be classified other than as provided in sec_301_7701-3 or to change its classification by filing form_8832 with the service_center designated on form_8832 sec_301_7701-3 provides that an election made under sec_301 c i will be effective on the date specified by the entity on form_8832 or on the date filed if no date is specified on the election form the effective date specified on form_8832 cannot be more than days prior to the date on which the election is filed and cannot be more than months after the date on which the election is filed sec_301_9100-1 provides that the commissioner has discretion to grant a reasonable extension of time under the rules set forth in sec_301_9100-2 and sec_301_9100-3 to make a regulatory election or a statutory election but no more than six months except in the case of a taxpayer who is abroad under all subtitles of the code except subtitles e g h and i sec_301_9100-1 defines a regulatory election to include an election whose due_date is prescribed by a regulation published in the federal_register sec_301_9100-2 provides the rules governing automatic extensions of time for making certain elections sec_301_9100-3 sets forth the standards the commissioner will use to determine whether to grant an extension of time for regulatory elections that do not meet the requirements of sec_301_9100-2 sec_301_9100-3 provides that requests for relief subject_to sec_301_9100-3 will be granted when the taxpayer provides evidence including affidavits described in sec_301_9100-3 to establish to the satisfaction of the commissioner that the taxpayer acted reasonably and in good_faith and granting relief will not prejudice the interests of the government conclusion based on the facts submitted and the representations made we conclude that the requirements of sec_301_9100-1 and sec_301_9100-3 have been satisfied as a result x is granted an extension of time of days from the date of this letter to file form_8832 plr-149705-08 with the appropriate service_center and to elect to be classified as a disregarded_entity for federal tax purposes effective d1 a copy of this letter should be attached to the form_8832 a copy is enclosed for that purpose except as expressly set forth above we express or imply no opinion concerning the federal tax consequences of the facts discussed above under any other provision of the code this ruling is directed only to the taxpayer requesting it sec_6110 provides that it may not be used or cited as precedent in accordance with a power_of_attorney on file with this office we are sending a copy of this letter to x’s authorized representative sincerely curtis g wilson curtis g wilson associate chief_counsel office of the associate chief_counsel passthroughs special industries enclosures copy of this letter copy for sec_6110 purposes