department of the treasury internal_revenue_service washington d c c tax exempt ando government entities division date may uniform issue list legend x y dear sir or madam contact person identification_number telephone number t cd b2 this is in reply to your rulings request of date on x's proposed transfer of all of its assets to y in a merger of x into y pursuant to sec_507 of the internal_revenue_code x and y are nonprofit_corporations exempt from federal_income_tax under sec_501 of the code and are private_foundations under sec_509 of the code x and y are effectively x's merger into y under state jaw will result in the transfer by controlled by the same persons operation of law of all of x's assets to y x has no expenditure_responsibility grants outstanding under sec_4945 of the code the following rulings are requested the transfer by operation of law of the assets of x to y pursuant to the merger will not affect the status of either x or y as an organization which is exempt from federal income_taxation and is described in sec_501 of the code the transfer by operation of law of the assets of x to y pursuant to the merger will constitute a transfer described in sec_507 of the code and the transfer will not result in a termination of x's private_foundation_status giving rise to the imposition of the termination_tax under sec_507 of the code ff x terminates its private_foundation_status at least one day after the transfer of all of its net assets to the y and so notifies the internal_revenue_service pursuant to sec_507 of the code then x will not be liable for the tax imposed under sec_507 because x will not have any assets after such termination and payment of expenses both prior to and after the transfer by operation of law of the assets of x to y pursuant to the merger x and y are effectively controlled by the same persons within the meaning of sec_1_482-1 of the income_tax regulations so that the transfer of assets by x to y will be treated as a transfer of all of x's assets to a private_foundation controlled by the same persons who control y within the meaning of sec_1_482-1 thus pursuant to sec_1 a i of the regulations the transfer will not subject x to the taxes imposed by sec_4941 through of the code because after the transfer y will be treated as if y were x for purposes of chapter and sec_509 of the code y will succeed to the aggregate tax_benefit if any of x as the transferee of the net assets of x y will receive the benefit of any transitional rules or savings provisions applicable to x as enumerated in sec_1_507-3 and ii of the regulations x's transfer of assets to y will not constitute a sale_or_other_disposition of property within the meaning of sec_4940 of the code and will not give rise to net_investment_income for x or y therefore the transfer of assets will not result in an imposition of additional taxes on x or under sec_4940 of the code and will not subject x to the two percent excise_tax on any gain that might otherwise be imposed the transfer of the assets by x to y pursuant to the merger will not constitute an act of self- dealing within the meaning of sec_4941 of the code and therefore will not result in the imposition of tax under sec_4941 of the code after x's transfer of assets to y pursuant to the merger y may reduce the amount of its required distributions under sec_4942 of the code by the amount if any of the excess qualifying_distribution carryover of x for prior years as defined by sec_4942 of the code further y's distributable_amount under sec_4942 of the code for its tax_year in which the transfer occurs will be increased by the distributable_amount for x for its tax_year in which the transfer occurs as if y had held the assets for the entire tax_year all qualifying distributions made by y during the entire year and all qualifying distrioutions made by x during its tax_year in which the transfer occurs will be treated as if made by y therefore the distribution require- ments of x under sec_4942 of the code in the year of the transfer may be fulfilled by y x will not be required to comply with the recordkeeping requirements under section g b of the code with respect to the transfer of assets to y pursuant to the merger after such transfer by operation of law of all of x's assets to y the transfer of the assets of x to y pursuant to the merger will not constitute an investment which jeopardizes the carrying out of exempt purposes within the meaning of sec_4944 of the code the transfer of the assets of x to y pursuant to the merger will not constitute a taxable expenditure under sec_4945 of the code and therefore will not result in the imposition of tax under sec_4945 of the code and neither x nor y will be required to exercise expenditure_responsibility over the assets transferred to y pursuant to the merger the reasonable and necessary legal accounting and other expenses and costs incurred by x to implement the transfer of its assets to y will constitute qualifying distributions by x under sec_4942 of the code and will not constitute taxable_expenditures by x under sec_4945 of the code sec_501 of the code provides for the exemption from federal_income_tax of nonprofit_organizations organized and operated exclusively for the charitable and or other exempt purposes stated in that section sec_509 of the code describes organizations exempt from federal_income_tax under sec_501 of the code are private_foundations subject_to the provisions of chapter of the code sec_507 of the code and sec_1_507-1 of the income_tax regulations provide that a private_foundation may voluntarily terminate its private_foundation_status by submitting to the internal_revenue_service a statement of its intention to voluntarily terminate its private_foundation_status pursuant to sec_507 and by paying any termination_tax under sec_507 of the code sec_507 of the code impose excise_tax on a private_foundation which voluntarily terminates its private_foundation_status under sec_507 of the code and provides that this sec_507 tax is equal to the lower_of the aggregate tax benefits that have resulted from the private foundation’s exempt status under sec_501 of the code or the value of the net assets of the private_foundation sec_507 of the code concerns the transfer of assets by one private_foundation to one or more other private_foundations and provides that each transferee private_foundation shall not be treated as a newly created organization sec_1_507-3 of the regulations indicates that a transfer under sec_507 of the code includes a transfer of assets from one private_foundation to one or more other private_foundations pursuant to any reorganization including a significant disposition of or more of the transferor foundation's assets sec_1_507-3 of the regulations provides that in a transfer of assets from one private_foundation to one or more private_foundations pursuant to a reorganization each transferee private_foundation shall a newly created organization but shall succeed to the transferor's aggregate tax benefits under sec_507 of the code not be treated as sec_507 of the code indicates that the aggregate tax benefits of a private_foundation refer to the value of its exemption from federal_income_tax and of the deductions taken by its donors during its existence sec_1_507-1 of the regulations provides that a private_foundation which transfers all of its net assets is not required to file annual information returns required by sec_6033 of the code for subsequent tax years after its tax_year of such transfer when it has no assets or activities sec_1_507-3 of the regulations provides that a transferor private_foundation is required to meet its charitable distribution_requirements under sec_4942 of the code even for any_tax year in which it makes a transfer of its assets to another private_foundation pursuant to sec_507 of its assets any recordkeeping requirements under sec_4942 of the code do not apply when the foundation has no assets private_foundation transfers all also where a the code of sec_1_507-3 of private_foundation has transferred all of its assets to another private_foundation in a transfer under sec_507 of the code it is not required to exercise expenditure_responsibility under sec_4945 of the code with respect to such transfer provides that where a regulations the sec_1_507-3 i of the regulations provides that if a private_foundation transfers assets to one or more private_foundations which are effectively controlled directly or indirectly within the meaning of sec_1_482-1 of the regulations by the same persons who effectively control the transferor foundation each transferee foundation will it were the transferor foundation for purposes of sec_4940 through and sec_507 through of the code each transferee is treated as its transferor in the proportion which the fair_market_value of the transferor’s assets transferred to the transferee bears to the fair_market_value of of the transferor's assets immediately before the transfer be treated as all if sec_1_507-3 ii of the regulations provides that a transfer of assets under sec_507 of the code does not relieve the transferor private_foundation from filing its own final tax_year return as required by sec_6043 of the code sec_1_507-4 of the regulations provides that the tax on termination of private_foundation a transfer of assets under section status under sec_507 of the code does not apply to b of the code sec_1_507-1 and sec_1_507-3 of the regulations provide that a transferor foundation's transfer of assets under sec_507 of the code will not constitute any termination of the transferor foundation's private_foundation_status under sec_509 of the code sec_4940 of the code imposes excise_tax on certain investment_income of a private_foundation sec_4941 of the code imposes excise_tax on any act of self-dealing between a private_foundation and any of its disqualified persons under sec_4946 of the code sec_53_4946-1 of the regulations provides that for purposes of self-dealing under sec_4941 of the code an exempt_organization under sec_501 of the code is not a disqualified_person sec_4942 of the code requires that a private_foundation must expend annual qualifying distributions under sec_4942 of the code for the conduct of exempt purposes revrul_78_387 c b describes the carryover of a transferor private foundation's excess qualifying distributions under sec_4942 of the code where the transferor and the transferee foundations are controlled by the same persons under sec_1_507-3 of the regulations the transferee is treated as the transferor so that the transferee can reduce its own distributable_amount under sec_4942 of the code by its share of the transferor foundation's excess qualifying distributions under sec_4942 of the code sec_4945 of the code imposes excise_tax on any private foundation's making of a taxable_expenditure under sec_4945 of the code sec_4945 of the code requires that in order to avoid making a taxable_expenditure a transferor private_foundation must exercise expenditure_responsibility under sec_4945 of the code on its grants to another private_foundation sec_4945 of the code defines expenditure_responsibility in terms of the grantor private_foundation requiring pre-grant inquiry and post-grant reports as to the grantee private_foundation on its uses of the grant sec_4945 of the code provides that in order to exercise expenditure_responsibility under sec_4945 the grantor private_foundation must under sec_4945 of the code see that its grant is spent solely for the grant's purpose must under sec_4945 of the code obtain complete reports from the grantee foundation on how the funds are spent and must under sec_4945 of the code report to the internal_revenue_service with respect to such grants analysi sec_1 x's transfer of all of its assets by merger under state law into y is for exempt purposes under sec_501 of the code and will not adversely affect the exemptions of x or y under sec_501 of the code under sec_507 of the code and sec_1_507-3 of the regulations a transfer under sec_507 of the code includes a transfer of assets from one private_foundation to one or more other private_foundations pursuant to any reorganization or liquidation or merger which includes any significant disposition of or more of the transferor foundation's assets because x will be in such a reorganization by its transfer by merger of ali of its assets to y x's transfer of all of its assets will be a transfer under sec_507 of the code under sec_1_507-4 of the regulations x's transfer of its assets pursuant to sec_507 of the code will not terminate x's private_foundation_status under sec_509 of the code and will not result in termination_tax under sec_507 of the code sec_507 of the code imposes excise_tax on a private_foundation which voluntarily this terminates its status as a private_foundation pursuant to sec_507 of the code sec_507 tax is equal to the lower_of a the aggregate tax benefits that have resulted from the foundation's exempt status under sec_501 of the code or b the value of the net assets of the foundation the value of x's net assets after x has transferred all of its assets to y will be zero thus at that time x's voluntary notice to the internal_revenue_service of its termination of its private_foundation_status pursuant to sec_507 of the code will not result in termination_tax under sec_507 of the code sec_1_507-3 i of the regulations provides that a transferor private_foundation transfers its assets to another private_foundation which is effectively controlled directly or indirectly by the same persons who effectively control the transferor private_foundation within the meaning of sec_1_482-1 of the regulations then the transferee private_foundation will be it were the transferor private_foundation for purposes of sec_4940 through treated as if and sec_507 through of the code because y's control is effectively by the same x's transfer will be a transfer to a transferee organization that is effectively persons who control x controlled by the same persons who control the transferor so that x's transfer is within sec_1_507-3 of the regulations if under sec_507 of the code and sec_1_507-3 of the regulations in this transfer of assets under sec_507 of the code x's aggregate tax benefits under sec_507 of the code will be transferred to y under sec_1_507-3 of the regulations x's transferee y will receive the benefits if any of the transitional rules and savings provisions of that regulation that were applicable to x x's transfer of assets to y will not result in tax under sec_4940 of the code x's transfer of assets will be made for exempt purposes under sec_501 of the code to y which is exempt from federal_income_tax under sec_501 of the code under sec_53_4946-1 of the regulations because y is exempt from federal_income_tax under sec_501 of the code y is not a disqualified_person as to x under sec_4946 of the code for purposes of sec_4941 of the code because x's transfer of assets will not be a transfer between a disqualified_person and a private_foundation x's transfer will not be an act of self- dealing between a disqualified_person and a private_foundation under sec_4941 of the code t- as in revrul_78_387 cited above after x transfers all of its assets to y x's excess qualifying distributions if any under sec_4942 of the code may be used by y to reduce y's distributable_amount under sec_4942 of the code by the amount if any of x's excess qualifying distributions carryover under sec_4942 of the code transferee y in its tax_year in which the transfer occurs can increase its distributable_amount under sec_4942 of the code by x's distributable_amount for x's tax_year in which x's transfer occurs transferee y can treat transferor x's qualifying distributions for x's tax_year of its transfer as if made by transferee y in addition to any qualifying distributions made by y alone thus x's distribution_requirements under sec_4942 of the code for its tax_year of its transfer can be fulfilled by transferee y under sec_1_507-3 of the regulations any recordkeeping requirement under sec_4942 of the code as to transferor x will not apply after x has transferred all of its assets to y x's transfer of its assets to y for exempt purposes under sec_501 of the code will not be a jeopardizing investment or result in tax under sec_4944 of the code sec_53_4945-6 allows assets to exempt_organizations under sec_501 of the code pursuant to sec_507 of the code without the transfers being taxable_expenditures under sec_4945 of the code provided that any applicable expenditure_responsibility under sec_4945 of the code is met thus the transfer of assets from x to y will not be a taxable_expenditure under sec_4945 of the code private_foundation to transfer its a sec_1_507-3 of the regulations provides that where a private_foundation transfers all of its assets to one or more exempt_organizations under sec_501 of the code pursuant to sec_507 of the code such transferor foundation will have no expenditure_responsibility requirement under sec_4945 of the code thus x will not have to exercise expenditure_responsibility under sec_4945 of the code with respect to its transfer of all of its assets to y under sec_53_4942_a_-3 of the regulations a private foundation's payment of administrative expenses as part of a charitable effort may constitute a qualifying_distribution thus the legal accounting and other necessary expenses_incurred to implement x's transfer to y if reasonable in amount will be paid to accomplish exempt purposes and will be qualifying distributions under sec_4942 a of the code accordingly we rule that the transfer by operation of law of the assets by x to y pursuant to the merger will not affect the status of either x or y as an organization which is exempt from federal income_taxation and is described in sec_501 of the code the transfer by operation of law of the assets of x to y pursuant to the merger will constitute a transfer described in sec_507 and the transfer will not result in a termination of x's private_foundation_status giving rise to the imposition of the termination_tax under sec_507 of the code if x terminates its private_foundation_status at least one day after the transfer of all of its net assets to the y and so notifies the internal_revenue_service pursuant to sec_507 of the code then x will not be liable for the tax imposed under sec_507 because x will not have any assets after such termination and payment of expenses both prior to and after the transfer by operation of law of the assets of x to y pursuant to the merger x and y are effectively controlled by the same persons within the meaning of sec_1_482-1 of the regulations so that the transfer of assets by x to y will be treated as a transfer of all of x's assets to a private_foundation controlled by the same persons who control y within the meaning of sec_1_482-1 thus pursuant to sec_1_507-3 of the regulations after the transfer y will be treated as if y were x for purposes of chapter and sec_509 of the code y will succeed to the aggregate tax benefits if any of x under sec_507 of the code as the transferee of the net assets of x y will receive the benefit of any transitional rules or savings provisions applicable to x as enumerated in sec_1 a i and ii of the regulations xs transfer of assets to y will not result in tax under sec_4940 of the code the transfer of the assets by x to y pursuant to the merger will not be an act of self-dealing and will not result in tax under sec_4941 of the code after x's transfer of assets to y pursuant to the merger y may reduce the amount of its required distributions under sec_4942 of the code by the amount if any of the excess qualifying_distribution carryover of x for prior years as defined by sec_4942 of the code further y's distributable_amount under sec_4942 of the code for its tax_year in which the transfer occurs can be increased by the distributable_amount for x for its tax_year in which the transfer occurs as if y had held the assets for the entire tax_year all qualifying distributions made by y during the entire year and all qualifying distributions made by x during its tax_year in which the transfer occurs can distribution_requirements under sec_4942 of the code in the year of the transfer can be fulfilled by y y therefore x's if made by be treated as x will not be required to comply with the recordkeeping requirements under sec_4942 of the code with respect to the transfer of assets to y pursuant to the merger after such transfer by operation of law of all of x's assets to y the transfer of the assets of x to y pursuant to the merger will not constitute an investment which jeopardizes the carrying out of exempt purposes within the meaning of sec_4944 of the code the transfer of all of the assets of x to y pursuant to the merger will not constitute a the be required to exercise taxable_expenditure under sec_4945 of the code and therefore will imposition of tax under sec_4945 and neither x nor y expenditure_responsibility over the assets transferred to y pursuant to the merger result not will in the reasonable and necessary legal accounting and other expenses and costs incurred by x to implement the transfer of its assets to y will constitute qualifying distributions by x under sec_4942 of the code and will not constitute taxable_expenditures by x under sec_4945 of the code because this rulings letter could help to resolve any questions please keep it in your permanent records this rulings letter is directed only to the organizations that requested it sec_6110 of the code provides that this rulings letter may not be used or cited as precedent sincerely si gi sued terrel m berkovsky terrell m berkovsky manager exempt_organizations technical group


internal_revenue_service number release date index numbers ------------------------ ------------------------------ ----------------------- ---------------------- ----------------------------- - department of the treasury washington dc third party communication date of communication month dd yyyy person to contact -------------------- id no ------------- telephone number --------------------- refer reply to cc corp plr-100049-06 date april -------------------------------------------------- --------------------------- ------------------------------ legend distributing ------------------------------------------------------------------- ----------------------------------------------------------- controlled ------------------------------------------------------------------------ ----------------------------------------------------------- merger partner ------------------------------------------------------------------- ----------------------------------------------------------- sub ------------------------------------------------------------------------ ----------------------------------------------------------- sub ------------------------------ ------------------------------------------------------------------- ----------------------------------------------------------- sub -------------------------------------------------------------- ----------------------------------------------------------- sub ------------------------------------------------------------------- ------------------------------------- ---------------------------------------- ---------------------------------------------- -------------------------------------------------------------------------------- ------------------- ---------------------- ------------------------------------------- ----------------------------------- plr-100049-06 ----------------------------------------------------------- sub ----------------------------------------------------------- sub ----------------------------------------------------------------------- ----------------------------------------------------------- sub ----------------------------------------------------------------- ----------------------------------------------------------- sub ----------------------------------------------------------------- ----------------------------------------------------------- sub ----------------------------------------------------------------- ----------------------------------------------------------- sub ----------------------------------------------------------------- ----------------------------------------------------------- business a subs ------------------------------------------------------------ -------------------------------------------------------------- ----------------------------------------------------------- sub -------------------------------------------------------------- ----------------------------------------------------------- sub ---------------------------------------------------------------------------------------------------------------- -------------------------------------------------------------- ----------------------------------------------------------- sub ------------------------------------------------------------------- ----------------------------------------------------------------- --------------------------------------------------------- --------------------------------------------------- ------------------------------------ ----- -------------------------------------------------------------------------------- ------------------------------------------------------ ------------------------------------------------------------------ ----------------------------------------------------------- ----------------------------------- -------------------------------------------------------------- ------------------------------------------------------ ------------------------------------------------ ----------------------------------- plr-100049-06 ----------------------------------------------------------- sub ------------------------------------------------------------------- ----------------------------------------------------------- sub ------------------------------------------------------------------- ----------------------------------------------------------- sub ------------------------------------------------------------------- ----------------------------------------------------------- sub ----------------------------------------------------------- sub ------------------------------------------------------------------- ----------------------------------------------------------- sub ------------------------------------------------------------------- --------------------------------------------------------- lp ----------------------------------------------------------- bank business a business b b acquisitions ---------------------------------------------------------------- shareholder a investment banks ------------------------------ ------------------------------ ----------------------------- ------------------------------------------ ----------------------------------------- --------------------------------------------------------------------- plr-100049-06 a b c d e f g h i j k l m n o date a ---------- ---------- ------------- ---- -- ------------- -------------- ------------- -------------- -------------- ---------------- -------------- ---- ---- ---- ------- ------- the rulings contained in this letter are based on facts and representations plr-100049-06 date b dear ------------------ this letter responds to your date letter requesting rulings as to the federal_income_tax consequences of a proposed transaction the information submitted in that request and in later correspondence is summarized below submitted by the taxpayer and accompanied by a penalty of perjury statement executed by an appropriate party this office has not verified any of the materials submitted in support of the request for rulings verification of the information representations and other data may be required as part of the audit process moreover no information provided by the taxpayer has been reviewed and no determination has been made regarding whether the proposed transaction i satisfies the business_purpose requirement of sec_1_355-2 of the income_tax regulations ii is used principally as a device for the distribution of the earnings_and_profits of the distributing_corporation or the controlled_corporation or both see sec_355 of the internal_revenue_code and sec_1_355-2 and iii is part of a plan or series of related transactions pursuant to which one or more persons will acquire directly or indirectly stock representing a percent or greater interest in the distributing_corporation or the controlled_corporation see sec_355 and sec_1_355-7 summary of facts distributing is a publicly traded holding_company with a single class of voting distributing has approximately dollar_figurea in short-term commercial paper outstanding common_stock outstanding the distributing common_stock and two series of convertible preferred_stock outstanding distributing is the common parent of an affiliated_group_of_corporations that file a consolidated federal_income_tax return the distributing group shareholder a owns more than five percent of the distributing stock but does not have a representative on distributing's board_of directors or participate actively in the management of distributing controlled is a corporation that has been newly formed in connection with the proposed transaction and will have a single class of voting common_stock outstanding the controlled common_stock commercial paper with maturities averaging less than m days given its short maturity the commercial paper has been renewed or rolled over since its initial issuance and will continue to be renewed prior to consummation of the proposed transaction in connection with the renewal distributing expects that the commercial paper to be re-issued will have a maturity of n days rather than m days distributing also has outstanding in addition to other third-party indebtedness approximately dollar_figureb face_amount of senior notes due with maturity dates ranging from date a to date b notes neither the commercial paper nor the notes were issued in anticipation of the proposed transaction distributing conducts business a and business b through its wholly owned distributing owns all of the outstanding_stock of each of sub sub sub sub plr-100049-06 sub sub sub sub sub and sub distributing also owns all of the outstanding_stock of each of the business a subs sub owns all of the outstanding_stock of sub and sub sub owns all of the outstanding_stock of sub sub sub sub and sub sub owns a limited_partnership_interest in lp sub owns all of the outstanding_stock of sub subsidiaries sub directly engages in business a and business b sub acquired certain of its business b assets and subsidiaries conducting business b within the past five years the b acquisitions each of sub sub sub sub and the business a subs directly engages in business a sub conducts business a through sub sub and sub each of which directly engages in business a distributing acquired the business being conducted by sub within the past five years by forming sub contributing cash to it and causing it to purchase all of the assets and assume the liabilities of a corporation engaged in business a the sub acquisition a and business b as conducted by distributing through its relevant subsidiaries has had gross_receipts and operating_expenses representing the active_conduct_of_a_trade_or_business for each of the past five years distributing's management has determined that the separation of business a from business b will serve a number of corporate business purposes including allowing business a and business b to adopt the most favorable capital structure for each business enabling investors to invest in a business that more closely fits their investment goals eliminating competition within a single business_enterprise and facilitating the merger of controlled into merger partner with merger partner surviving the merger the taxpayer has submitted financial information indicating that each of business pre-distribution restructuring i before the contribution the distribution each defined below and the merger the following steps will occur collectively the pre-distribution restructuring distributing will contribute certain business a assets to sub and the stock of sub will then be contributed to sub which will then contribute such stock to sub intended to qualify as liquidations under sec_332 and sec_337 sub will sell certain business b assets to sub sub will sell all of its interest in lp to sub sub and sub each inactive corporations will liquidate in transactions iv iii ii plr-100049-06 v sub will distribute all of the stock of sub to distributing in a vii prior to the distribution distributing expects various of the business a vi distributing will contribute all of the stock of sub to sub transaction intended to qualify as a distribution under sec_355 subsidiaries to distribute to distributing stock in bank that will subsequently be redeemed by bank pursuant to recent legislation requiring dissolution of bank distributing and various subsidiaries conducting business a which accounts have generally arisen in the ordinary course of business owned subsidiary sub in a transaction intended to qualify as a reorganization under sec_368 and will distribute all of the stock of sub to distributing in a transaction intended to qualify as a distribution under sec_355 sub will contribute certain business a assets to a newly formed wholly viii distributing will cancel existing accounts_receivable and payable between distributing will contribute all of the stock of sub to sub ix x to accomplish the stated business purposes the following transaction has been proposed collectively the proposed transaction proposed transaction i distributing will contribute all of the stock of subsidiaries directly or indirectly conducting business a to controlled including sub sub sub sub sub and the business a subs in exchange solely for additional shares of controlled common_stock approximately dollar_figurec in cash that controlled expects to borrow from unrelated third parties the special dividend debt securities to be issued by controlled the controlled securities that will have a term of not less than d years will be redeemable by controlled no earlier than e years after issuance if at all and will bear interest at a rate designed to render the securities worth their face_amount and the assumption by controlled of the business a liabilities if any the contribution holders of the distributing common_stock the distribution distributing will effect the distribution by delivering to an exchange agent on behalf of the distributing shareholders all of the outstanding shares of controlled common_stock which the agent will hold on behalf of the distributing shareholders for conversion into shares of merger partner stock pursuant to the merger described in step vi below from unrelated third parties the bank debt which amount will be reduced to the iii on the date of the distribution controlled will borrow approximately dollar_figuref distributing will distribute all of the stock of controlled pro_rata to the ii plr-100049-06 extent that controlled decides to issue debt securities to the public of up to dollar_figureg face_amount the public debt the proceeds from the bank debt and to the extent issued the public debt will be used to pay the special dividend repurchase dollar_figureh of the existing debt of the business a subsidiaries repurchase dollar_figurei of existing debt of merger partner and pay expenses iv distributing intends to transfer all of the controlled securities received by it in the contribution to the investment banks in exchange for commercial paper with a face_amount of approximately dollar_figurej and notes with a face_amount of approximately dollar_figurek less the face_amount of commercial paper so acquired which the investment banks acting as principals for their own accounts will have acquired in the marketplace at least days prior to the distribution the debt exchange distributing expects to consummate the debt exchange pursuant to an exchange_agreement entered into by the investment banks no sooner than five days after acquiring the commercial paper and notes in the marketplace and at least nine days prior to the distribution pursuant to which the parties will agree to exchange an amount of commercial paper and notes with a fair_market_value to be determined as of the date the exchange is consummated approximately equal to an aggregate dollar_figurek face_amount of controlled securities the investment banks intend to sell the controlled securities to the public pursuant to non- binding orders solicited prior to the debt exchange promptly as practicable after the distribution but in no event later than o months after the distribution and pursuant to the plan_of_reorganization distributing will use the special dividend to repay existing indebtedness that was not incurred in connection with the distribution and or to repurchase shares of distributing common_stock merger partner in a transaction qualifying as a statutory merger under applicable state law with merger partner surviving the liabilities of controlled assumed by merger partner pursuant to the merger will exceed the adjusted_basis of controlled's assets except for cash received in lieu of fractional shares if any the shareholders of controlled will receive solely common_stock of merger partner in exchange for their controlled common_stock any fractional shares of merger partner stock will be aggregated merger partner will transfer to an exchange agent on behalf of the controlled shareholders either the cash necessary to pay to shareholders in lieu of such fractional shares or instruct the exchange agent to sell such fractional shares on the open market the proceeds from such sales will then be delivered to the controlled shareholders who would otherwise have received the fractional shares after the merger the former controlled shareholders will own in the aggregate approximately percent of the outstanding merger partner common_stock which will be the only class of merger partner stock outstanding controlled will be primarily liable for transaction costs associated with the issuance of the controlled securities the bank debt the public debt and the merger totaling not more than dollar_figurel in the aggregate distributing will deposit the special dividend in a segregated account as immediately after the distribution controlled will merge with and into vi v vii as a result of the merger merger partner will become the obligor on the plr-100049-06 controlled securities issued all other terms of the controlled securities will remain the same merger partner will enter into several agreements relating to the separation of business a from business b and certain continuing transactions between the companies including certain transitional agreements and a tax_sharing_agreement in conjunction with the proposed transaction distributing controlled and representations b a other than the controlled securities to be held by distributing prior to their distributing makes the following representations with respect to the contribution and the distribution distribution to distributing's creditors any indebtedness owed by controlled to distributing after the distribution will not constitute stock_or_securities to the distributing common_stock will be received by any shareholder of distributing as a creditor employee or in any capacity other than that of a shareholder of distributing business b is representative of the present operations of sub and with regard to sub there have been no substantial operational changes since the date of the last financial statements submitted other than the b acquisitions no part of the consideration to be distributed by distributing with respect the five years of financial information submitted on behalf of sub 1’s c d the five years of financial information submitted on behalf of each of sub sub sub sub sub sub sub and the business a subs is representative of the present operations of those corporations and with regard to such corporations there have been no substantial operational changes since the date of the last financial statements submitted e immediately after the distribution at least percent of the fair_market_value of the gross assets of distributing will consist of the stock and securities of controlled corporations ie sub that are engaged in the active_conduct_of_a_trade_or_business as defined in sec_355 f provided that the sub acquisition qualifies as an expansion of the business a within the meaning of sec_1_355-3 immediately after the distribution at least percent of the fair_market_value of the gross assets of controlled will consist of the stock and securities of controlled corporations ie sub sub sub sub sub and the business a subs that are engaged directly or indirectly in the active_conduct_of_a_trade_or_business as defined in sec_355 g plr-100049-06 immediately after the 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 ie sub sub and sub that are engaged directly in the active_conduct_of_a_trade_or_business as defined in sec_355 h following the distribution distributing and controlled through their respective controlled_subsidiaries will continue the active_conduct of their respective businesses independently and with their separate employees i the distribution is being carried out for the following business purposes allowing business a and business b to adopt the most favorable capital structure for the business given the different profiles of their businesses enabling investors who seek either growth or current cash return respectively to invest in the separate business that more closely fits their investment goals eliminating competition within a single corporate enterprise between business a and business b and facilitating the merger the distribution is motivated in whole or substantial part by one or more of these corporate business purposes j the distribution is not used principally as a device for the distribution of the earnings_and_profits of distributing or controlled or both k the total adjusted_basis and the fair_market_value of the assets transferred to controlled by distributing each will equal or exceed the sum of i any liabilities assumed within the meaning of sec_357 by controlled and ii the total of any money and the fair_market_value of any other_property within the meaning of sec_361 received by distributing and transferred to its creditors and or shareholders in connection with the reorganization l any liabilities assumed within the meaning of sec_357 in the transaction m no indebtedness between distributing and its subsidiaries and were incurred in the ordinary course of business and are associated with the assets being transferred controlled and its subsidiaries has been or will be cancelled in connection with the distribution other than the settlement of open intercompany account balances attributable to the normal business operations of distributing and its subsidiaries prior to the distribution and controlled and its subsidiaries at the time of or subsequent to the distribution except for the controlled securities to be issued to distributing and distributed to distributing's creditors in connection with the distribution and payables arising under the transitional agreements or otherwise in the ordinary course of business no intercorporate debt will exist between distributing and its subsidiaries n r p q o no property will be transferred by distributing to controlled for which an except for certain payments that will be made in connection with the tax no two parties to the proposed transactions are investment companies as immediately before the distribution items of income gain loss deduction plr-100049-06 investment_credit allowed under sec_47 will be claimed and credit will be taken into account as required by the applicable intercompany_transaction regulations see sec_1_1502-13 and sec_1 as in effect before the publication of t d c b and as currently in effect sec_1_1502-13 as published by t d further distributing's excess_loss_account if any with respect to its controlled common_stock will be included in income immediately before the distribution to the extent required by applicable treasury regulations see sec_1 sharing_agreement and certain services agreements that are transitional in nature payments made in connection with any continuing transactions between distributing and its subsidiaries and controlled and its subsidiaries following the distribution will be for fair_market_value based on terms and conditions arrived at by the parties bargaining at arm’s length defined in sec_368 and iv determined after applying sec_355 will hold stock possessing percent or more of the total combined voting power of all classes of distributing stock entitled to vote or percent or more of the total value of shares of all classes of distributing stock that was acquired by purchase as defined in sec_355 and during the five-year period determined after applying sec_355 ending on the date of the distribution 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 acquired by purchase as defined in sec_355 and during the five-year period determined after applying sec_355 ending on the date of the distribution or attributable to distributions on distributing stock that was acquired by purchase as defined in sec_355 and during the five-year period determined after applying sec_355 ending on the date of the distribution the meaning of sec_1_355-7 that includes the distribution taking the merger into account the distribution is not part of a plan or series of related transactions within the meaning of sec_1_355-7 pursuant to which one or more persons will acquire directly or indirectly stock representing a percent or greater interest within the meaning of the merger may be part of a plan or series of related transactions within for purposes of sec_355 immediately after the distribution no person for purposes of sec_355 immediately after the distribution no person u s t v the total fair_market_value of the assets transferred in the contribution will plr-100049-06 sec_355 in distributing or controlled including any predecessor or successor of any such corporation equal or exceed the aggregate adjusted_basis of those assets within the meaning of sec_361 its creditors and or shareholders pursuant to the plan_of_reorganization with respect to the merger distributing controlled and merger partner make the following representations the controlled securities issued to distributing will qualify as securities distributing will transfer the special dividend received from controlled to w x z at least percent of the proprietary interest in controlled will be y the fair_market_value of the merger partner stock and cash in lieu of fractional aa merger partner has no plan or intention to sell or otherwise dispose_of any bb neither merger partner nor any person related to merger partner within shares if any received by each controlled shareholder will be approximately equal to the fair_market_value of the controlled common_stock surrendered in exchange therefor exchanged for merger partner stock and will be preserved within the meaning of sec_1_368-1 of the assets of controlled acquired in the merger except for dispositions made in the ordinary course of business and except that merger partner may seek to dispose_of the stock or assets of sub the meaning of sec_1_368-1 has any plan or intention directly or through any subsidiary_corporation to purchase any merger partner stock after the merger other than through stock purchases on the open market see rev_rul cc other than the controlled securities the bank debt and the public debt the liabilities of controlled assumed within the meaning of sec_357 by merger partner will have been incurred in the ordinary course of business and will be associated with the assets being transferred will continue the active_conduct of business a controlled and the controlled shareholders will pay their respective expenses if any incurred in connection with the merger dd following the merger merger partner through its controlled_subsidiaries ee subject_to step vi of the proposed transaction merger partner ii jj ff the merger will qualify as a statutory merger under applicable state law there is no intercorporate indebtedness existing between controlled and the fair_market_value of the controlled assets to be transferred to merger gg no two parties to the merger will be investment companies as defined in hh controlled will not be under the jurisdiction of a court in a title or similar plr-100049-06 merger partner that was issued acquired or will be settled at a discount sec_368 and iv case under sec_368 partner will equal or exceed the sum of the liabilities assumed as determined under sec_357 by merger partner kk none of the compensation received by any shareholder employee of controlled will be separate consideration for or allocable to any of their shares of controlled stock none of the shares of merger partner stock received by any shareholder employee of controlled pursuant to the merger will be separate consideration for or allocable to any employment agreement and the compensation paid to any shareholder employee of controlled will be for services actually rendered and will be commensurate with amounts paid to third parties bargaining at arm's length for similar services agreement and other ancillary agreements that are transitional in nature payments made in connection with any continuing transactions between distributing and its subsidiaries and merger partner and its subsidiaries following the merger will be for fair_market_value based on terms and conditions arrived at by the parties bargaining at arm’s length stock will be solely for the purpose of avoiding the expense and inconvenience to merger partner of issuing fractional shares and will not represent separately bargained- for consideration it is expected that the total cash consideration that will be paid to the shareholders of record of controlled instead of issuing fractional shares will not exceed one percent of the total consideration that will be issued in the transaction to the controlled shareholders in exchange for their shares of controlled common_stock any fractional share interests of each controlled shareholder of record will be aggregated and it is intended that no controlled shareholder of record will receive cash in an amount equal to or greater than the value of one full share of controlled common_stock mm the payment of cash in lieu of fractional shares if any of merger partner except for payments that will be made in connection with the tax sharing ll plr-100049-06 rulings controlled’s holding_period in each asset received by controlled in the distributing will not recognize any gain_or_loss on the distribution sec_361 the contribution followed by the distribution will qualify as a reorganization distributing will not recognize any gain_or_loss on the contribution sec_357 controlled will not recognize any gain_or_loss on the contribution sec_1032 taking into account the intercompany_transaction regulations and their impact controlled’s basis in each asset received in the contribution will equal the basis based solely on the information submitted and the representations made we rule as follows on the contribution and distribution within the meaning of sec_368 distributing and controlled will each be a_party_to_a_reorganization within the meaning of sec_368 and a b of that asset in the hands of distributing immediately before its transfer sec_362 contribution will include the period during which distributing held that asset sec_1223 on among other things the deconsolidation of controlled and the subsequent planned dispositions of the controlled securities distributing will not recognize any income gain loss or deduction with respect to the controlled securities other than any i amount of income gain loss or deduction that offsets controlled's corresponding amount of income gain loss or deduction upon the deemed satisfaction of the controlled securities ii deductions attributable to the fact that distributing debt obligations may be redeemed at a premium iii income attributable to the fact that distributing debt obligations may be redeemed at a discount iv interest_expense accrued with respect to the distributing debt obligations and v income or gain realized on the transfer of the controlled securities in the debt exchange attributable to appreciation in the controlled securities while held by distributing following the distribution otherwise include any amount in income upon the receipt of the controlled common_stock sec_355 as adjusted under sec_1_358-1 shall be allocated between the share of distributing common_stock with respect to which the distribution is made and the share or shares of controlled common_stock or allocable portions thereof received with respect to the share of distributing common_stock in proportion to their fair market values if one each distributing shareholder’s basis in a share of distributing common_stock the distributing shareholders will not recognize any gain_or_loss and will not plr-100049-06 share of controlled common_stock is received in respect of more than one share of distributing common sock the basis of each share of distributing common_stock must be allocated to the shares of controlled common_stock received in a manner that reflects that to the extent possible a share of controlled common_stock is received in respect of shares of distributing common_stock acquired on the same date and at the same price if a distributing shareholder that purchased or acquired shares of distributing common_stock on different dates or at different prices is not able to identify which particular share of controlled common_stock or portion thereof is received with respect to a particular share of distributing common_stock the shareholder may designate which controlled common_stock is received with respect to a particular share of distributing common_stock provided the designation is consistent with the terms of the distribution each distributing shareholder’s holding_period in the controlled common_stock received will include the holding_period of the distributing common_stock with respect to which the distribution of the controlled common_stock is made provided that the distributing common_stock is held as a capital_asset on the date of the distribution sec_1223 earnings_and_profits will be allocated between distributing and controlled in accordance with sec_312 payments made by distributing to controlled or by controlled to distributing under the tax_sharing_agreement or other transitional agreements regarding liabilities indemnities or other obligations that a have arisen or will arise for a taxable_period ending with or before the distribution or for a taxable_period beginning on or before and ending after the distribution and b will not become fixed or determinable until after the distribution will be treated as occurring immediately before the distribution see revrul_83_73 c b based solely on the information submitted and the representations made we rule as follows on the merger the merger will qualify as a reorganization under sec_368 provided the merger qualifies as a statutory merger under applicable law controlled and merger partner will each be a_party_to_a_reorganization under sec_368 controlled will not recognize gain_or_loss on the transfer of its assets to merger partner and the assumption by merger partner of the liabilities of controlled including the controlled securities the bank debt and the public debt sec_357 sec_357 and sec_361 merger partner will not recognize gain_or_loss on the receipt of controlled assets in exchange for merger partner stock sec_1032 plr-100049-06 merger partner’s basis in each asset received in the merger will equal the basis of that asset in the hands of controlled immediately before its transfer sec_362 merger partner’s holding_period in each asset received by merger partner in the merger will include the period during which controlled held that asset sec_1223 merger partner will succeed to and take into account those attributes of controlled described in sec_381 sec_381 and sec_1_381_a_-1 these items will be taken into account by merger partner subject_to the conditions and limitations specified in sec_381 sec_382 sec_383 and sec_384 and the regulations thereunder no gain_or_loss will be recognized by the controlled shareholders on the receipt of merger partner stock in exchange for controlled common_stock sec_354 a controlled shareholder who receives cash in lieu of a fractional share will recognize gain_or_loss measured by the difference between the basis allocated to the fractional share transferred as determined below and the amount of cash received sec_1001 any gain_or_loss will be treated as capital_gain or loss provided such fractional share will be held as a capital_asset on the date of the distribution sec_1221 and sec_1222 each controlled shareholder’s basis in the merger partner stock received will be the same as the basis of the share or shares or allocable portions thereof of controlled common_stock exchanged therefor allocated in the manner described in sec_1_358-2 each controlled shareholder’s holding_period in the merger partner stock received in the merger will include the holding_period in the controlled common_stock exchanged therefor provided the controlled common_stock is held as a capital_asset on the date of the merger sec_1223 caveats no opinion is expressed about the tax treatment of the proposed transaction under other provisions of the code or regulations or the tax treatment of any conditions existing at the time of or effects resulting from the proposed transaction that are not specifically covered by the above rulings in particular no opinion is expressed regarding i whether the distribution satisfies the business_purpose requirement of sec_1_355-2 ii whether the proposed transaction is used principally as a device for the distribution of the earnings_and_profits of the distributing_corporation or the controlled_corporation or both see sec_355 and sec_1_355-2 and iii whether the distribution and an acquisition or acquisitions are part of a plan or series of related transactions under sec_355 additionally no opinion is expressed regarding any_tax effects of the pre-distribution restructuring and the repurchase of the existing plr-100049-06 debt of the business a subsidiaries and existing debt of merger partner pursuant to step iii of the proposed transaction procedural statements sincerely in accordance with the power_of_attorney on file in this office a copy of this ruling this ruling is directed only to the taxpayer requesting it sec_6110 provides that it may not be used or cited as precedent a copy of this letter must be attached to any income_tax return to which it is relevant alternatively taxpayers filing their returns electronically may satisfy this requirement by attaching a statement to their return that provides the date and control number of the letter_ruling letter will be sent to your authorized representative cc -------------------------------------------------------------------- ----------------------------------- ---------------------------------------------- ------------------------------------------- ------------------------------------------------------ ---------------------------------------------------------- --------------------------- ------------------------- ----------------------------------- ___________________________ richard k passales senior counsel branch office of associate chief_counsel corporate ---------------------------------


internal_revenue_service department of the treasury washington dc number release date index numbers person to contact telephone number refer reply to cc psi - plr-116551-00 date date decedent wife d1 child child child state will estate ira ira x y dear this letter responds to a letter dated date and subsequent correspondence submitted on your behalf by your authorized representative requesting rulings under sec_643 sec_661 sec_662 and sec_663 of the internal_revenue_code with regard to the distribution of ira monies from decedent’s estate the information submitted states that on d1 decedent died survived by wife child child and child will was duly admitted to probate in state article third of will provides that decedent gives devises and bequeaths to child child and to trustee for the benefit of child upon the terms and conditions set forth in article fourth to share equally the largest amount if any which can pass free of federal estate_tax under will by reason of the credit unified_credit described in sec_2010 of the code which shall be in effect for the year of decedent’s death and the state_death_tax_credit provided that use of this credit does not require an increase in the state_death_taxes payable by reason of decedent’s death however if the residual amount under article fifth is less than the spousal right of election under the law of state the value of the bequests to child child and trustee for the benefit of child shall be reduced accordingly to allow the residual amount under article fifth to the extent possible to be equal to the aforementioned spousal right of election article fourth of will provides that decedent gives devises and bequeaths to trustee the trust amount as set forth in article third to be held in trust the trustee shall pay to child the income from the trust for her support education and maintenance when child attains the age of twenty five years the trust for her benefit shall cease and the trustee shall pay over to her absolutely the principal and interest if any article fifth of will provides that all the rest residue and remainder of decedent’s estate both real and personal of every kind and description and wheresoever situated decedent gives devises and bequeaths to wife article seven of will appoints wife as executrix of will article eight of will paragraph d provides that without limitation of the powers conferred upon the executrix by statute or by general rules of law executrix is specifically authorized and empowered to make distributions in cash or in_kind upon any division of decedent’s estate as of the date of decedent’s death the amount payable to child child and trustee for the benefit of child was not ascertainable rather the amount is dependent on a number of factors which include the federal unified_credit state estate_taxes which will reduce the size of the bequest administration_expenses that are charged to principal but are not deductible for estate_tax purposes and wife’s elective share wife’s elective share under state law may exceed the residuary which in this case it did resulting in a reduction of the bequest wife’s elective share under state law equals the greater of a dollar_figure or b one-third of the net estate in determining the value of the spousal right of election under state law decedent’s net estate must first be determined in order to determine a decedent’s net estate decedent’s probate_estate and certain non- probate assets must be totaled and then reduced by debts administration_expenses and reasonable funeral_expenses but all estate_taxes are disregarded therefore under these circumstances the bequest is not ascertainable as of the date of decedent’s death included in decedent’s estate as of d1 is ira with a then value of dollar_figurex and ira with a then value of dollar_figurey ira and ira are payable to estate wife acting in her capacity as executrix of estate executrix intends to withdraw funds from decedent’s iras and have the proceeds paid to estate executrix will then exercise her discretion granted under will in allocating ira proceeds to satisfy the bequests in article third and article fifth executrix intends to pay wife’s share out of ira monies in accordance with a ruling previously issued to wife by the service wife intends to roll over a portion of the ira monies from estate to her ira sec_643 provides that the term distributable_net_income dni means with respect to any taxable_year the taxable_income of the estate_or_trust with certain modifications as provided in sec_643 and sec_661 provides that a deduction is allowed in computing the taxable_income of an estate for a given taxable_year with respect to any amounts properly paid or credited or required to be distributed for said taxable_year to the extent that the deduction does not exceed the distributable_net_income of the estate sec_662 provides that subject_to sec_662 there shall be included in the gross_income of a beneficiary to whom an amount specified in sec_661 is paid credited or required to be distributed by an estate_or_trust described in sec_661 the sum of the following amounts the amount of income_for_the_taxable_year_required_to_be_distributed_currently to such beneficiary whether distributed or not if the amount of income required to be distributed currently to all beneficiaries exceeds the distributable_net_income computed without the deduction allowed by sec_642 relating to deduction for charitable etc purposes of the estate_or_trust then in lieu of the amount provided in the preceding sentence there shall be included in the gross_income of the beneficiary an amount which bears the same ratio to distributable_net_income as so computed as the amount of income required to be distributed currently to such beneficiary bears to the amount required to be distributed currently to all beneficiaries for purposes of this section the phrase the amount of income_for_the_taxable_year_required_to_be_distributed_currently includes any amount required to be paid out of income or corpus to the extent such amount is paid out of income for such taxable_year all other_amounts properly paid credited or required to be distributed to such beneficiary for the taxable_year if the sum of a the amount of income_for_the_taxable_year_required_to_be_distributed_currently to all beneficiaries and b all other_amounts exceeds the distributable_net_income of the estate_or_trust then in lieu of the amount provided in the preceding sentence there shall be included in the gross_income of the beneficiary an amount which bears the same ratio to distributable_net_income reduced by the amounts specified in sec_662 as the other_amounts properly paid credited or required to be distributed to the beneficiary bear to the other_amounts properly paid credited or required to be distributed to all beneficiaries sec_663 provides that an amount which under the terms of the governing instrument is properly paid or credited as a gift or bequest of a specific sum of money or of specific property and which is paid or credited all at once or in not more than installments shall not be included as amounts falling within sec_661 or sec_662 sec_1_663_a_-1 of the income_tax regulations provides that in order to qualify as a gift or bequest of a specific sum of money or of specific property under sec_663 the amount of money or the identity of the specific property must be ascertainable under the terms of a testator’s will as of the date of his death or under the terms of an inter_vivos_trust instrument as of the date of the inception of the trust sec_663 provides that if within the first days of any taxable_year of an estate or a_trust an amount is properly paid or credited such amount shall be considered paid or credited on the last date of the preceding tax_year sec_663 provides that sec_663 shall apply with respect to any taxable_year of an estate or a_trust only if the executor of such estate or the fiduciary of such trust as the case may be elects in such manner and at such time as the secretary prescribes by regulations to have sec_663 apply for such taxable_year sec_663 provides that for the sole purpose of determining the amount of distributable_net_income in the application of sec_661 and sec_662 in the case of a single trust having more than one beneficiary substantially separate and independent shares of different beneficiaries in the trust shall be treated as separate trusts similar rules shall apply to treat substantially separate and independent shares of different beneficiaries in an estate having more than beneficiary as separate estates the existence of such substantially separate and independent shares of different beneficiaries and manner of treatment as separate trusts or estates shall be determined in accordance with regulations prescribed by the secretary decedent died after the effective date of sec_663 with respect to its application to estates but prior to the effective date date of regulations promulgated under sec_663 sec_1 c with respect to their application to estates sec_1 c provides that for estates with respect to decedents who died on or after the date that of the tax reform act of became effective but before date the irs will accept any reasonable interpretation of the separate share provisions including those that were provided in the proposed_regulations under sec_663 c b in accordance with the ruling previously issued to wife by the service executrix will fund wife’s residuary share with estate’s ira proceeds upon receipt wife will roll over the ira proceeds to her ira as decedent died prior to the effective date of sec_1 c with respect to their application to estates the executrix’s exercise of her discretion specifically granted to her by will in making distributions from estate shall be treated as a reasonable interpretation of the separate share provision ira proceeds received by estate from ira and ira for a given taxable_year of estate are included in the gross_income of estate for said year the gross_income portion of the ira proceeds enter into the computation of dni as defined in sec_643 with respect to the taxable_year of estate in which ira proceeds are received the bequest to child child and trustee in trust for the benefit of child is in the form of a pecuniary formula bequest and the amount cannot be ascertained as of the date of decedent’s death therefore the bequest to child child and trustee in trust for the benefit of child is not a specific sum of money under sec_663 because the bequest is not a specific sum of money under sec_663 the gross_income portions of the ira proceeds distributed under article third of will to child child and trustee in trust for the benefit of child are included in estate’s dni and are deductible by estate under sec_661 for a given taxable_year to the extent that estate has dni for said taxable_year with respect to which said distributions are made provided that said distributions are made within days after the close of said taxable_year of estate and executrix makes a timely election for such taxable_year under sec_663 the beneficiaries under article third of will child child and trustee in trust for the benefit of child must include in gross_income the distributions made to the beneficiaries by estate as provided by sec_662 except as specifically set forth above no opinion is expressed concerning the federal tax consequences of the facts described above under any other provision of the code this ruling is directed only to the taxpayer who requested it sec_6110 of the code provides that it may not be used or cited as precedent pursuant to a power_of_attorney on file with this office a copy of this letter is being sent to executrix’s and beneficiaries’ attorneys sincerely yours j thomas hines chief branch office of the associate chief_counsel passthroughs and special industries enclosures copy of this letter copy for sec_6110 purposes