internal_revenue_service number release date index number -------------------------- ------------------------ ------------------------------- ---------------------------------------- ------------------------------------------------- ---------------------------------------- department of the treasury washington dc third party communication none date of communication not applicable_person to contact ---------------------- id no ---------------- telephone number -------------------- refer reply to cc corp plr-138070-13 date date legend parent distributing distributing distributing distributing distributing ------------------------------------------------------------------------ ----------------------- ------------------------------------------------------------------------ ------------------------------------------------------------------------ ----------------------- ------------------------------------------------------------------------ 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------------------------------------------------------------------------ ----------------------- plr-138070-13 sub foreign city a branch foreign city b branch business a business b business c business d business e business f business g ------------------------------------------------------------------------ ----------------------- ------------------------------------------------- -------------------------------------- ------------------------------------------------------------------------ ------------------------------------------------------------------------ ------------------------------------------------------------------------ ------------------------------------------------------------------------ ---------------------------------------------------- ------------------------------------------------------------------------ ------------------------------------------------------------------------ --------------------------------------------------------- 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------------------------------------------------------------------------ ------------------------------------------------------------------------ ------------------------------------------------------------------------ --------------------------------------------- ------------------------------------------------------------------------ ------------------------------------------------------------------------ ------------------------------------------------------------------------ ------------------------------------------------------------------------ plr-138070-13 contribution rights contribution rights country a distribution date industry state a a b c d liabilities dear -------------- ------------------------------------------------------------------------ -------------------------------------------------------- ------------------------------------------------------------------------ ------------------------------------------------------------------------ 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----------------------------------------------------------------------- ------------------------------------------------------------------------ ------------------------------------------------------------------------ ------------------------------------------------------------------------ ------------------------------------------------------------------------ ------------------------------------------------------------------------ ------------------------------------------------------------------------ ------------------------------------------------------------------------ ------------------------------------------ plr-138070-13 this letter responds to your date request for rulings regarding certain federal_income_tax consequences of the proposed transaction defined below the material information submitted in that request and subsequent correspondence is summarized below the rulings contained in this letter are based upon the facts and representations 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 material submitted in support of the request for rulings verification of the information representations and other data may be required as part of the audit process in particular this office has not reviewed any information pertaining to and has made no determination regarding whether the proposed transaction i satisfies the business_purpose requirement of sec_1_355-2 of the income_tax regulations ii is being used principally as a device for the distribution of earnings_and_profits of any of the distributing corporations the controlled_corporation or any combination thereof see sec_355 and sec_1 d or iii is part of a plan or series of related transactions pursuant to which one or more persons will acquire directly or indirectly stock representing a or greater interest in any of the distributing corporations or the controlled_corporation see sec_355 and sec_1_355-7 summary of facts parent a state a corporation is the common parent of an affiliated_group_of_corporations that join in the filing of a consolidated federal_income_tax return the parent group the authorized and outstanding capital stock of parent includes one class of common_stock that is publicly traded and widely held parent is a holding_company that through numerous direct and indirect domestic and foreign subsidiaries and other entities operates in industry parent is also engaged through numerous direct and indirect subsidiaries and other entities in the conduct of business a business b business c business d business e business f and business g parent is an accrual_method and calendar_year taxpayer parent owns all of the outstanding_stock of sub one of parent’s principal operating subsidiaries sub operates through a number of domestic and foreign ------- ------------ including the foreign city b branch sub owns all of the outstanding_stock of distributing distributing wholly owns distributing distributing wholly owns distributing distributing wholly owns sub distributing owns approximately a and sub owns approximately b of the outstanding_stock of distributing distributing wholly owns distributing distributing owns all but one of the outstanding ordinary shares of distributing a single ordinary share of distributing is held by fsub an entity disregarded as separate from its parent distributing for federal_income_tax purposes all of distributing 2’s preference shares representing less than c by vote and value of all the outstanding_stock of distributing are held by fsub a direct wholly owned subsidiary of sub all of the outstanding_stock of which plr-138070-13 in turn is owned by sub distributing also owns all of the outstanding equity of fsub which is treated as an entity disregarded as separate from its owner for federal_income_tax purposes distributing owns all of the outstanding ordinary shares of distributing and most of the outstanding preference shares of distributing parent owns all of the outstanding equity of fsub an entity disregarded as separate from its owner for federal_income_tax purposes fsub owns the remaining outstanding preference shares of distributing the distributing preference shares held by fsub represent less than c by vote and value of all the outstanding_stock of distributing distributing owns all of the outstanding equity of fsub which is treated as an entity disregarded as separate from its owner for federal_income_tax purposes all of the above described entities are domestic except for distributing distributing distributing distributing fsub fsub fsub fsub and fsub each of which is organized under the laws of country a distributing distributing distributing sub sub and sub are members of the parent group distributing through are referred to collectively herein as the distributing corporations distribution sec_1 through are referred to collectively herein as the distributions controlled will be formed by distributing under the laws of country a in connection with the proposed transaction controlled will have outstanding one class of common shares all of which will be owned initially by distributing for purposes of satisfying the active trade_or_business requirements of sec_355 each of the distributing corporations will rely on business d and controlled will rely on business e financial information has been submitted indicating that each of business d and business e has had gross_receipts and operating_expenses representing the active_conduct_of_a_trade_or_business for each of the past five years the proposed transaction is motivated by the corporate business_purpose of achieving country a legal and regulatory objectives in a manner consistent with u s legal and regulatory requirements with the result that the activities of each of business a and business e will be conducted directly by sub the legal entity that owns the ----- ----------- serviced by those businesses the corporate business_purpose proposed transaction for what are represented to be valid business purposes parent proposes to undertake the following transactions i distributing will cause fsub to transfer business e to controlled contribution in exchange for additional controlled stock and the assumption_of_liabilities assets contributed to controlled in contribution are expected to include goodwill and certain other intangible assets workforce office equipment and supplies working_capital and receivables as well as the contribution rights the contribution plr-138070-13 rights are also used in connection with certain other businesses as conducted by distributing and or fsub and are expected to continue to be so used by such businesses following the completion of the proposed transaction controlled may also make distributions after the date of contribution in the aggregate amount of d distributing will distribute all the stock of controlled to distributing and any cash if received in connection with contribution distribution distributing will distribute all the stock of controlled to distributing distribution distributing will cause fsub to transfer business a to controlled contribution either in the form of a capital_contribution or in exchange for additional controlled stock controlled will also assume liabilities of business a assets contributed to controlled in contribution are expected to include goodwill and certain other intangible assets workforce office equipment and supplies working_capital and receivables as well as the contribution rights the contribution rights are also used in connection with certain other businesses as conducted by distributing and or fsub and are expected to continue to be so used by such businesses following the completion of the proposed transaction distributing will distribute all the stock of controlled to distributing distribution distributing will distribute all the stock of controlled to distributing and sub pro_rata distribution sub will thereafter convert to a limited_liability_company under state a law and be treated as an entity disregarded from its parent distributing for federal_income_tax purposes sub will distribute the controlled stock it receives in distribution to distributing in a transaction intended to qualify as a liquidation under sec_332 ii iii iv v vi vii viii distributing will distribute all the stock of controlled to distributing distribution ix x distributing will distribute all the stock of controlled to distributing distribution distributing will distribute all the stock of controlled to sub distribution plr-138070-13 xi sub and controlled will formally adopt a plan_of_liquidation with respect to controlled the plan_of_liquidation pursuant to which controlled will elect to be treated as an entity disregarded from its parent sub under sec_301_7701-3 the ctb election as a matter of country a corporate mechanics the assets and liabilities of the businesses held by controlled will be transferred to sub as soon as practicable following controlled’s ctb election but the actual winding-up and dissolution of controlled is expected to take approximately one year following the formal adoption of the plan_of_liquidation contribution sec_1 and collectively the contributions and distribution sec_1 through will all be made after the close of business on distribution date the ctb election will be made effective on the day after distribution date with the result that controlled will be deemed to liquidate into sub under sec_332 immediately before the close of distribution date pursuant to sec_301_7701-3 immediately following each distribution each of distributing and each other distributing corporation’s sag will engage in business d through the foreign city a branch of distributing and sub will engage in among its other businesses business a and business e representations the following representations have been made regarding the proposed transaction a contribution and distribution no part of the consideration to be distributed by distributing will be received by a shareholder as a creditor employee or in any capacity other than that of a shareholder of distributing the five years of financial information submitted on behalf of business d is representative of the present operations of business d and with regard to such business there have been no substantial operational changes since the date of the last financial statements submitted the five years of financial information submitted on behalf of business e is representative of the present operations of business e and with regard to such business there have been no substantial operational changes since the date of the last financial statements submitted following distribution distributing and controlled or its successor will each continue the active_conduct of its respective business independently and with its separate employees plr-138070-13 distribution is being undertaken for the corporate business_purpose distribution is motivated in whole or substantial part by the corporate business_purpose distribution is not being used principally as a device for the distribution of the earnings_and_profits e_p of distributing or controlled or both the total fair_market_value of the assets transferred to controlled by distributing in contribution will equal or exceed the sum of i the amount of liabilities if any assumed within the meaning of sec_357 by controlled in connection with the exchange ii the amount of liabilities if any owed to controlled by distributing that are discharged or extinguished in connection with the exchange and iii the amount of cash and the fair_market_value of any other_property other than stock and securities permitted to be received under sec_361 without the recognition of gain received by distributing in connection with the exchange the fair_market_value of the assets of controlled will exceed the amount of its liabilities immediately after contribution the total adjusted bases of the assets transferred to controlled by distributing will equal or exceed the liabilities if any assumed as determined under sec_357 by controlled the liabilities if any assumed within the meaning of sec_357 by controlled in contribution were incurred in the ordinary course of business and are associated with the assets transferred to controlled in connection with contribution any indebtedness owed by controlled to distributing after distribution will not constitute stock_or_securities no intercorporate debt will exist between distributing and controlled or its successor at the time of or subsequent to distribution other than the liabilities and other than obligations that arise and have arisen in the ordinary course of business for purposes of sec_355 immediately after distribution no person determined after applying sec_355 will hold stock possessing or more of the total combined voting power of all classes of distributing stock entitled to vote or 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 distribution date for purposes of sec_355 immediately after distribution no person determined after applying sec_355 will hold stock possessing or more of the total combined voting power of all classes of controlled stock entitled to vote or 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 distribution or attributable to plr-138070-13 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 distribution date payments made in connection with all continuing transactions if any between distributing or its subsidiaries and controlled or its successor will be for fair_market_value based on terms and conditions arrived at by the parties bargaining at arm’s length or terms and conditions comparable to those that would be arrived at by parties bargaining at arm’s length no two parties to distribution are investment companies as defined in sec_368 and iv distribution is not part of a plan or series of related transactions within the meaning of sec_1_355-7 pursuant to which one or more persons other than persons described in sec_355 will acquire directly or indirectly stock representing a or greater interest within the meaning of sec_355 in distributing or controlled including any predecessor or successor of any such corporation immediately after distribution either i no person will hold a or greater interest within the meaning of sec_355 in the stock of distributing or controlled who did not hold such an interest before the transaction or ii neither distributing nor controlled is or will be a disqualified_investment_corporation for purposes of sec_355 distributing neither acquired_business d nor acquired control of an entity conducting business d during the five-year period ending on distribution date in a transaction in which gain_or_loss was recognized or treated as recognized in whole or in part except in connection with transactions that constitute expansions as contemplated by proposed sec_1_355-3 throughout the five-year period ending on distribution date distributing will have been the principal_owner of the goodwill and significant assets of business d and will continue to be the principal_owner following distribution distributing neither acquired_business e nor control of an entity conducting business e during the five-year period ending on distribution date in a transaction in which gain_or_loss was recognized or treated as recognized in whole or in part except in connection with acquisitions from a partnership described in proposed sec_1_355-3 or transactions that constitute expansions as contemplated by proposed sec_1_355-3 throughout the five-year period ending on distribution date distributing or its predecessor partnership will have been the principal_owner of the goodwill and significant assets of business e and controlled or its successor will be the principal_owner following distribution plr-138070-13 distributing is and both distributing and controlled will be a controlled_foreign_corporation cfc within the meaning of sec_957 immediately before and after contribution and distribution at all times before and immediately after contribution and distribution neither distributing nor controlled has been or will be a passive_foreign_investment_company pfic within the meaning of sec_1297 distributing 1’s contribution of assets to controlled in actual or constructive exchange for controlled stock in contribution is not an exchange described in sec_1_367_b_-4 sec_1_367_b_-4 or sec_1_367_b_-4 the notice requirements of sec_1_367_b_-1 will be satisfied with respect to contribution and distribution distributing and sub will be sec_1248 shareholders within the meaning of sec_1_367_b_-2 with respect to distributing immediately before distribution and with respect to each of distributing and controlled immediately after distribution distributing will not transfer any united_states real_property interests as defined in sec_1_897-1 during contribution distributing controlled and the shareholders of distributing will pay their respective expenses if any incurred in connection with distribution b distribution no part of the consideration to be distributed by distributing will be received by a shareholder as a creditor employee or in any capacity other than that of a shareholder of distributing the five years of financial information submitted on behalf of business d is representative of the present operations of business d and with regard to such business there have been no substantial operational changes since the date of the last financial statements submitted the five years of financial information submitted on behalf of business e is representative of the present operations of business e and with regard to such business there have been no substantial operational changes since the date of the last financial statements submitted distributing will treat all members of its separate_affiliated_group within the meaning of sec_355 the distributing sag as one corporation in determining whether the requirements of sec_355 regarding the active_conduct_of_a_trade_or_business are satisfied plr-138070-13 following distribution distributing and controlled or its successor will each continue the active_conduct of its respective business independently and with its separate employees distribution is being undertaken for the corporate business_purpose distribution is motivated in whole or substantial part by the corporate business_purpose distribution is not being used principally as a device for the distribution of the e_p of distributing or controlled or both any indebtedness owed by controlled to distributing after distribution will not constitute stock_or_securities no intercorporate debt will exist between distributing and controlled or its successor at the time of or subsequent to distribution other than the liabilities and other than obligations that arise and have arisen in the ordinary course of business for purposes of sec_355 immediately after distribution no person determined after applying sec_355 will hold stock possessing or more of the total combined voting power of all classes of distributing stock entitled to vote or 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 distribution date for purposes of sec_355 immediately after distribution no person determined after applying sec_355 will hold stock possessing or more of the total combined voting power of all classes of controlled stock entitled to vote or 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 distribution dateor 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 distribution date payments made in connection with all continuing transactions if any between distributing or its subsidiaries and controlled or its successor will be for fair_market_value based on terms and conditions arrived at by the parties bargaining at arm’s length or terms and conditions comparable to those that would be arrived at by parties bargaining at arm’s length no two parties to distribution are investment companies as defined in sec_368 and iv plr-138070-13 distribution is not part of a plan or series of related transactions within the meaning of sec_1_355-7 pursuant to which one or more persons other than persons described in sec_355 will acquire directly or indirectly stock representing a or greater interest within the meaning of sec_355 in distributing or controlled including any predecessor or successor of any such corporation immediately after distribution either i no person will hold a or greater interest within the meaning of sec_355 in distributing or controlled who did not hold such an interest before the transaction or ii neither distributing nor controlled is or will be a disqualified_investment_corporation for purposes of sec_355 the distributing sag neither acquired_business d nor acquired control of an entity conducting business d during the five-year period ending on distribution datein a transaction in which gain_or_loss was recognized or treated as recognized in whole or in part except in connection with transfers between members of the distributing sag or transactions that constitute expansions as contemplated by proposed sec_1_355-3 throughout the five-year period ending on distribution date the distributing sag will have been the principal_owner of the goodwill and significant assets of business d and will continue to be the principal_owner following distribution the distributing sag neither acquired_business e nor acquired control of an entity conducting business e during the five-year period ending on distribution date in a transaction in which gain_or_loss was recognized or treated as recognized in whole or in part except in connection with transfers between members of the distributing sag acquisitions from a partnership described in proposed sec_1_355-3 or transactions that constitute expansions as contemplated by proposed sec_1_355-3 throughout the five-year period ending on distribution date the distributing sag or its predecessor partnership will have been the principal_owner of the goodwill and significant assets of business e and controlled or its successor will be the principal_owner following distribution the notice requirements of sec_1_367_b_-1 will be satisfied with respect to distribution immediately before and after distribution distributing and controlled each will be a cfc distributing and sub will be sec_1248 shareholders within the meaning of sec_1_367_b_-2 with respect to distributing immediately before distribution and with respect to each of distributing and controlled immediately after distribution at all times before and immediately after distribution neither distributing nor controlled has been or will be a pfic plr-138070-13 distributing controlled and the shareholders of distributing will pay their respective expenses if any incurred in connection with distribution c contribution and distribution no part of the consideration to be distributed by distributing will be received by a shareholder as a creditor employee or in any capacity other than that of a shareholder of distributing the five years of financial information submitted on behalf of business d is representative of the present operations of business d and with regard to such business there have been no substantial operational changes since the date of the last financial statements submitted the five years of financial information submitted on behalf of business e is representative of the present operations of business e and with regard to such business there have been no substantial operational changes since the date of the last financial statements submitted distributing will treat all members of its separate_affiliated_group within the meaning of sec_355 the distributing sag as one corporation in determining whether the requirements of sec_355 regarding the active_conduct_of_a_trade_or_business are satisfied following distribution distributing and controlled or its successor will each continue the active_conduct of its respective business independently and with its separate employees distribution is being undertaken for the corporate business_purpose distribution is motivated in whole or substantial part by the corporate business_purpose distribution is not being used principally as a device for the distribution of the e_p of distributing or controlled or both the total fair_market_value of the assets transferred to controlled by distributing in contribution will exceed the sum of i the amount of liabilities if any assumed within the meaning of sec_357 by controlled in connection with the exchange ii the amount of liabilities if any owed to controlled by distributing that are discharged or extinguished in connection with the exchange and iii the amount of cash and the fair_market_value of any other_property other than stock_or_securities permitted to be received under sec_361 without the recognition of gain received by distributing in connection with the exchange the fair_market_value of the assets of controlled will exceed the amount of its liabilities immediately after contribution plr-138070-13 the total adjusted bases of the assets transferred to controlled by distributing will equal or exceed the liabilities if any assumed as determined under sec_357 by controlled the liabilities if any assumed within the meaning of sec_357 by controlled in contribution were incurred in the ordinary course of business and are associated with the assets transferred to controlled in connection with contribution any indebtedness owed by controlled to distributing after distribution will not constitute stock_or_securities no intercorporate debt will exist between distributing and controlled or its successor at the time of or subsequent to distribution other than the liabilities and other than obligations that arise and have arisen in the ordinary course of business for purposes of sec_355 immediately after distribution no person determined after applying sec_355 will hold stock possessing or more of the total combined voting power of all classes of distributing stock entitled to vote or 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 distribution date for purposes of sec_355 immediately after distribution no person determined after applying sec_355 will hold stock possessing or more of the total combined voting power of all classes of controlled stock entitled to vote or 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 distribution dateor 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 distribution date payments made in connection with all continuing transactions if any between distributing or its subsidiaries and controlled or its successor will be for fair_market_value based on terms and conditions arrived at by the parties bargaining at arm’s length or terms and conditions comparable to those that would be arrived at by parties bargaining at arm’s length no two parties to distribution are investment companies as defined in sec_368 and iv distribution is not part of a plan or series of related transactions within the meaning of sec_1_355-7 pursuant to which one or more persons other than persons described in sec_355 will acquire directly or indirectly stock representing a plr-138070-13 or greater interest within the meaning of sec_355 in distributing or controlled including any predecessor or successor of any such corporation immediately after distribution either i no person will hold a or greater interest within the meaning of sec_355 in the stock of distributing or controlled who did not hold such interest before the transaction or ii neither distributing nor controlled is or will be a disqualified_investment_corporation for purposes of sec_355 the distributing sag neither acquired_business d nor acquired control of an entity conducting business d during the five-year period ending on distribution date in a transaction in which gain_or_loss was recognized or treated as recognized in whole or in part except in connection with transfers between members of the distributing sag or transactions that constitute expansions as contemplated by proposed sec_1_355-3 throughout the five-year period ending on distribution date the distributing sag will have been the principal_owner of the goodwill and significant assets of business d and will continue to be the principal_owner following distribution the distributing sag neither acquired_business e nor acquired control of an entity conducting business e during the five-year period ending on distribution date in a transaction in which gain_or_loss was recognized or treated as recognized in whole or in part except in connection with transfers between members of the distributing sag acquisitions from a partnership described in proposed sec_1_355-3 or transactions that constitute expansions as contemplated by proposed sec_1_355-3 throughout the five-year period ending on distribution date the distributing sag or its predecessor partnership will have been the principal_owner of the goodwill and significant assets of business e and controlled or its successor will be the principal_owner following distribution distributing is and each of distributing and controlled will be a cfc within the meaning of sec_957 immediately before and after contribution and distribution at all times before and immediately after contribution and distribution neither distributing nor controlled has been or will be a pfic distributing 3’s contribution of assets to controlled in actual or constructive exchange for controlled stock in contribution is not an exchange described in sec_1_367_b_-4 sec_1_367_b_-4 or sec_1_367_b_-4 the notice requirements of sec_1_367_b_-1 will be satisfied with respect to contribution and distribution distributing and sub will be sec_1248 shareholders within the meaning of sec_1_367_b_-2 with respect to distributing immediately before distribution and with respect to each of distributing and controlled immediately after distribution plr-138070-13 distributing will not transfer any united_states real_property interests as defined in sec_1_897-1 during contribution distributing controlled and the shareholders of distributing will pay their respective expenses if any incurred in connection with distribution d distribution no part of the consideration to be distributed by distributing will be received by a shareholder as a creditor employee or in any capacity other than that of a shareholder of distributing the five years of financial information submitted on behalf of business d is representative of the present operations of business d and with regard to such business there have been no substantial operational changes since the date of the last financial statements submitted the five years of financial information submitted on behalf of business e is representative of the present operations of business e and with regard to such business there have been no substantial operational changes since the date of the last financial statements submitted distributing will treat all members of its separate_affiliated_group within the meaning of sec_355 the distributing sag as one corporation in determining whether the requirements of sec_355 regarding the active_conduct_of_a_trade_or_business are satisfied following distribution distributing and controlled or its successor will each continue the active_conduct of its respective business independently and with its separate employees distribution is being undertaken for the corporate business_purpose distribution is motivated in whole or substantial part by the corporate business_purpose distribution is not being used principally as a device for the distribution of the e_p of distributing or controlled or both any indebtedness owed by controlled to distributing after distribution will not constitute stock_or_securities no intercorporate debt will exist between distributing and controlled or its successor at the time of or subsequent to distribution other than the liabilities and other than obligations that arise and have arisen in the ordinary course of business plr-138070-13 for purposes of sec_355 immediately after distribution no person determined after applying sec_355 will hold stock possessing or more of the total combined voting power of all classes of distributing stock entitled to vote or 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 distribution date for purposes of sec_355 immediately after distribution no person determined after applying sec_355 will hold stock possessing or more of the total combined voting power of all classes of controlled stock entitled to vote or 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 distribution date 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 distribution date payments made in connection with all continuing transactions if any between distributing or its subsidiaries and controlled or its successor will be for fair_market_value based on terms and conditions arrived at by the parties bargaining at arm’s length or terms and conditions comparable to those that would be arrived at by parties bargaining at arm’s length no two parties to distribution are investment companies as defined in sec_368 and iv distribution is not part of a plan or series of related transactions within the meaning of sec_1_355-7 pursuant to which one or more persons other than persons described in sec_355 will acquire directly or indirectly stock representing a or greater interest within the meaning of sec_355 in distributing or controlled including any predecessor or successor of any such corporation immediately after distribution either i no person will hold a or greater interest within the meaning of sec_355 in the stock of distributing or controlled who did not hold such interest before the transaction or ii neither distributing nor controlled will be a disqualified_investment_corporation for purposes of sec_355 the distributing sag neither acquired_business d nor acquired control of an entity conducting business d during the five-year period ending on distribution date in a transaction in which gain_or_loss was recognized or treated as recognized in whole or in part except in connection with transfers between members of the distributing sag or transactions that constitute expansions as contemplated by proposed sec_1_355-3 throughout the five-year period ending on distribution date the distributing sag will have been the principal_owner of the goodwill and significant assets of business d and will continue to be the principal_owner following distribution plr-138070-13 the distributing sag neither acquired_business e nor acquired control of an entity conducting business e during the five-year period ending on distribution date in a transaction in which gain_or_loss was recognized or treated as recognized in whole or in part except in connection with transfers between members of the distributing sag acquisitions from a partnership described in proposed sec_1_355-3 or transactions that constitute expansions as contemplated by proposed sec_1_355-3 throughout the five-year period ending on distribution date the distributing sag or its predecessor partnership will have been the principal_owner of the goodwill and significant assets of business e and controlled or its successor will be the principal_owner following distribution the notice requirements of sec_1_367_b_-1 will be satisfied with respect to distribution distributing is and each of distributing and controlled will be a cfc within the meaning of sec_957 immediately before and after distribution distributing and sub will be sec_1248 shareholders within the meaning of sec_1_367_b_-2 with respect to distributing and controlled immediately before distribution and distributing will be a sec_1248 shareholder within the meaning of sec_1_367_b_-2 with respect to each of distributing and controlled immediately after distribution and the liquidation of sub at all times before and immediately after distribution neither distributing nor controlled has been or will be a pfic distributing controlled and the shareholders of distributing will pay their respective expenses if any incurred in connection with distribution e distribution no part of the consideration to be distributed by distributing will be received by a shareholder as a creditor employee or in any capacity other than that of a shareholder of distributing the five years of financial information submitted on behalf of business d is representative of the present operations of business d and with regard to such business there have been no substantial operational changes since the date of the last financial statements submitted the five years of financial information submitted on behalf of business e is representative of the present operations of business e and with regard to such business there have been no substantial operational changes since the date of the last financial statements submitted plr-138070-13 distributing will treat all members of its separate_affiliated_group within the meaning of sec_355 the distributing sag as one corporation in determining whether the requirements of sec_355 regarding the active_conduct_of_a_trade_or_business are satisfied following distribution distributing and controlled or its successor will each continue the active_conduct of its respective business independently and with its separate employees distribution is being undertaken for the corporate business_purpose distribution is motivated in whole or substantial part by the corporate business_purpose distribution is not being used principally as a device for the distribution of the e_p of distributing or controlled or both any indebtedness owed by controlled to distributing after distribution will not constitute stock_or_securities no intercorporate debt will exist between distributing and controlled or its successor at the time of or subsequent to distribution other than the liabilities and other than obligations that arise and have arisen in the ordinary course of business 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 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 any excess_loss_account distributing may have in the controlled stock or a member may have in the stock of another member that is required to be taken into account by sec_1_1502-19 will be included in income immediately before the distribution to the extent required by regulations see sec_1_1502-19 for purposes of sec_355 immediately after distribution no person determined after applying sec_355 will hold stock possessing or more of the total combined voting power of all classes of distributing stock entitled to vote or 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 distribution date for purposes of sec_355 immediately after distribution no person determined after applying sec_355 will hold stock possessing or more of the total combined voting power of all classes of controlled stock entitled to vote or 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 distribution date or attributable to distributions plr-138070-13 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 distribution date payments made in connection with all continuing transactions if any between distributing or its subsidiaries and controlled or its successor will be for fair_market_value based on terms and conditions arrived at by the parties bargaining at arm’s length or terms and conditions comparable to those that would be arrived at by parties bargaining at arm’s length no two parties to distribution are investment companies as defined in sec_368 and iv distribution is not part of a plan or series of related transactions within the meaning of sec_1_355-7 pursuant to which one or more persons other than persons described in sec_355 will acquire directly or indirectly stock representing a or greater interest within the meaning of sec_355 in distributing or controlled including any predecessor or successor of any such corporation immediately after distribution either i no person will hold a or greater interest within the meaning of sec_355 in the stock of distributing or controlled who did not hold such an interest before the transaction or ii neither distributing nor controlled will be a disqualified_investment_corporation for purposes of sec_355 the distributing sag neither acquired_business d nor acquired control of an entity conducting business d during the five-year period ending on distribution date in a transaction in which gain_or_loss was recognized or treated as recognized in whole or in part except in connection with transfers between members of the distributing sag or transactions that constitute expansions as contemplated by proposed sec_1_355-3 throughout the five-year period ending on distribution date the distributing sag will have been the principal_owner of the goodwill and significant assets of business d and will continue to be the principal_owner following distribution the distributing sag neither acquired_business e nor acquired control of an entity conducting business e during the five-year period ending on distribution date in a transaction in which gain_or_loss was recognized or treated as recognized in whole or in part except in connection with transfers between members of the distributing sag acquisitions from a partnership described in proposed sec_1_355-3 or transactions that constitute expansions as contemplated by proposed sec_1_355-3 throughout the five-year period ending on distribution date the distributing sag or its predecessor partnership will have been the principal_owner of the goodwill and significant assets of business e and controlled or its successor will be the principal_owner following distribution immediately before and after distribution controlled will be a cfc plr-138070-13 distributing will be a sec_1248 shareholder within the meaning of sec_1 f - c with respect to controlled immediately before distribution distributing will be a sec_1248 shareholder within the meaning of sec_1 f - c with respect to controlled immediately after distribution at all times before and immediately after distribution controlled has not been nor will be a pfic distributing will comply with the reporting procedures established under sec_1_367_b_-5 in order to establish that distributing is a corporation for purposes of applying sec_1_367_b_-5 distributing will comply with the reporting procedures established under sec_1_367_e_-1 in order to establish that distributing is a qualified u_s_person for purposes of applying sec_1_367_e_-1 distribution will be an existing stock_distribution as defined in sec_1 f - b unless distributing and distributing elect to apply the provisions of sec_1_1248_f_-2 in accordance with sec_1_1248_f_-2 distributing will include in gross_income as a dividend the sec_1248 amount with respect to the stock of controlled distributed to distributing sec_1_1248_f_-1 distributing controlled and the shareholders of distributing will pay their respective expenses if any incurred in connection with distribution f distribution no part of the consideration to be distributed by distributing will be received by a shareholder as a creditor employee or in any capacity other than that of a shareholder of distributing the five years of financial information submitted on behalf of business d is representative of the present operations of business d and with regard to such business there have been no substantial operational changes since the date of the last financial statements submitted the five years of financial information submitted on behalf of business e is representative of the present operations of business e and with regard to such business there have been no substantial operational changes since the date of the last financial statements submitted distributing will treat all members of its separate_affiliated_group within the meaning of sec_355 the distributing sag as one corporation in determining whether the requirements of sec_355 regarding the active_conduct_of_a_trade_or_business are satisfied plr-138070-13 following distribution distributing and controlled or its successor will each continue the active_conduct of its respective business independently and with its separate employees distribution is being undertaken for the corporate business_purpose distribution is motivated in whole or substantial part by the corporate business_purpose distribution is not being used principally as a device for the distribution of the e_p of distributing or controlled or both any indebtedness owed by controlled to distributing after distribution will not constitute stock_or_securities no intercorporate debt will exist between distributing and controlled or its successor at the time of or subsequent to distribution other than the liabilities and other than obligations that arise and have arisen in the ordinary course of business 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 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 any excess_loss_account distributing may have in the controlled stock or a member may have in the stock of another member that is required to be taken into account by sec_1_1502-19 will be included in income immediately before the distribution to the extent required by regulations see sec_1_1502-19 for purposes of sec_355 immediately after distribution no person determined after applying sec_355 will hold stock possessing or more of the total combined voting power of all classes of distributing stock entitled to vote or 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 distribution date for purposes of sec_355 immediately after distribution no person determined after applying sec_355 will hold stock possessing or more of the total combined voting power of all classes of controlled stock entitled to vote or 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 distribution date 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 distribution date plr-138070-13 payments made in connection with all continuing transactions if any between distributing or its subsidiaries and controlled or its successor will be for fair_market_value based on terms and conditions arrived at by the parties bargaining at arm’s length or terms and conditions comparable to those that would be arrived at by parties bargaining at arm’s length no two parties to distribution are investment companies as defined in sec_368 and iv distribution is not part of a plan or series of related transactions within the meaning of sec_1_355-7 pursuant to which one or more persons other than persons described in sec_355 will acquire directly or indirectly stock representing a or greater interest within the meaning of sec_355 in distributing or controlled including any predecessor or successor of any such corporation immediately after distribution either i no person will hold a or greater interest within the meaning of sec_355 in the stock of distributing or controlled who did not hold such an interest before the transaction or ii neither distributing nor controlled will be a disqualified_investment_corporation for purposes of sec_355 the distributing sag neither acquired_business d nor acquired control of an entity conducting business d during the five-year period ending on distribution date in a transaction in which gain_or_loss was recognized or treated as recognized in whole or in part except in connection with transfers between members of the distributing sag or transactions that constitute expansions as contemplated by proposed sec_1_355-3 throughout the five-year period ending on distribution date the distributing sag will have been the principal_owner of the goodwill and significant assets of business d and will continue to be the principal_owner following distribution the distributing sag neither acquired_business e nor acquired control of an entity conducting business e during the five-year period ending on distribution date in a transaction in which gain_or_loss was recognized or treated as recognized in whole or in part except in connection with transfers between members of the distributing sag acquisitions from a partnership described in proposed sec_1_355-3 or transactions that constitute expansions as contemplated by proposed sec_1_355-3 throughout the five-year period ending on distribution date the distributing sag or its predecessor partnership will have been the principal_owner of the goodwill and significant assets of business e and controlled or its successor will be the principal_owner following distribution immediately before and after distribution controlled will be a cfc distributing will be a sec_1248 shareholder within the meaning of sec_1 f - c with respect to controlled immediately before distribution plr-138070-13 distributing will be a sec_1248 shareholder within the meaning of sec_1 f - c with respect to controlled immediately after distribution at all times before and immediately after distribution controlled has not been nor will be a pfic distributing will comply with the reporting procedures established under sec_1_367_b_-5 in order to establish that distributing is a corporation for purposes of applying sec_1_367_b_-5 distributing will comply with the reporting procedures established under sec_1_367_e_-1 in order to establish that distributing is a qualified u_s_person for purposes of applying sec_1_367_e_-1 distribution will be an existing stock_distribution as defined in sec_1 f - b unless distributing and distributing elect to apply the provisions of sec_1_1248_f_-2 in accordance with sec_1_1248_f_-2 subject_to ruling f distributing will include in gross_income as a dividend the sec_1248 amount with respect to the stock of controlled distributed to distributing sec_1_1248_f_-1 distributing controlled and the shareholders of distributing will pay their respective expenses if any incurred in connection with distribution g distribution no part of the consideration to be distributed by distributing will be received by a shareholder as a creditor employee or in any capacity other than that of a shareholder of distributing the five years of financial information submitted on behalf of business d is representative of the present operations of business d and with regard to such business there have been no substantial operational changes since the date of the last financial statements submitted the five years of financial information submitted on behalf of business e is representative of the present operations of business e and with regard to such business there have been no substantial operational changes since the date of the last financial statements submitted distributing will treat all members of its separate_affiliated_group within the meaning of sec_355 the distributing sag as one corporation in determining whether the requirements of sec_355 regarding the active_conduct_of_a_trade_or_business are satisfied plr-138070-13 following distribution distributing and controlled or its successor will each continue the active_conduct of its respective business independently and with its separate employees distribution is being undertaken for the corporate business_purpose distribution is motivated in whole or substantial part by the corporate business_purpose distribution is not being used principally as a device for the distribution of the e_p of distributing or controlled or both any indebtedness owed by controlled to distributing after distribution will not constitute stock_or_securities no intercorporate debt will exist between distributing and controlled or its successor at the time of or subsequent to distribution other than the liabilities and other than obligations that arise and have arisen in the ordinary course of business 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 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 any excess_loss_account distributing may have in the controlled stock or a member may have in the stock of another member that is required to be taken into account by sec_1_1502-19 will be included in income immediately before the distribution to the extent required by regulations see sec_1_1502-19 for purposes of sec_355 immediately after distribution no person determined after applying sec_355 will hold stock possessing or more of the total combined voting power of all classes of distributing stock entitled to vote or 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 distribution date for purposes of sec_355 immediately after distribution no person determined after applying sec_355 will hold stock possessing or more of the total combined voting power of all classes of controlled stock entitled to vote or 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 distribution date 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 distribution date plr-138070-13 payments made in connection with all continuing transactions if any between distributing or its subsidiaries and controlled or its successor will be for fair_market_value based on terms and conditions arrived at by the parties bargaining at arm’s length or terms and conditions comparable to those that would be arrived at by parties bargaining at arm’s length no two parties to distribution are investment companies as defined in sec_368 and iv distribution is not part of a plan or series of related transactions within the meaning of sec_1_355-7 pursuant to which one or more persons other than persons described in sec_355 will acquire directly or indirectly stock representing a or greater interest within the meaning of sec_355 in distributing or controlled including any predecessor or successor of any such corporation immediately after distribution either i no person will hold a or greater interest within the meaning of g in distributing or controlled who did not hold such an interest before the transaction or ii neither distributing nor controlled will be a disqualified_investment_corporation for purposes of sec_355 the distributing sag neither acquired_business d nor acquired control of an entity conducting business d during the five-year period ending on distribution date in a transaction in which gain_or_loss was recognized or treated as recognized in whole or in part except in connection with transfers between members of the distributing sag or transactions that constitute expansions as contemplated by proposed sec_1_355-3 throughout the five-year period ending on distribution date the distributing sag will have been the principal_owner of the goodwill and significant assets of business d and will continue to be the principal_owner following distribution the distributing sag neither acquired_business e nor acquired control of an entity conducting business e during the five-year period ending on distribution date in a transaction in which gain_or_loss was recognized or treated as recognized in whole or in part except in connection with transfers between members of the distributing sag acquisitions from a partnership described in proposed sec_1_355-3 or transactions that constitute expansions as contemplated by proposed sec_1_355-3 throughout the five-year period ending on distribution date the distributing sag or its predecessor partnership will have been the principal_owner of the goodwill and significant assets of business e and controlled or its successor will be the principal_owner following distribution immediately before and after distribution prior to its deemed liquidation controlled will be a cfc distributing will be a sec_1248 shareholder within the meaning of sec_1 f - c with respect to controlled immediately before distribution plr-138070-13 sub will be a sec_1248 shareholder within the meaning of sec_1_1248_f_-1 with respect to controlled immediately after distribution and prior to the deemed liquidation of controlled at all times before and immediately after distribution controlled has not been nor will be a pfic distributing will comply with the reporting procedures established under sec_1_367_b_-5 in order to establish that sub is a corporation for purposes of applying sec_1_367_b_-5 distributing will comply with the reporting procedures established under sec_1_367_e_-1 in order to establish that sub is a qualified u_s_person for purposes of applying sec_1_367_e_-1 distribution will be an existing stock_distribution as defined in sec_1 f - b unless distributing and sub elect to apply the provisions of sec_1 f - b in accordance with sec_1_1248_f_-2 subject_to ruling g distributing will include in gross_income as a dividend the sec_1248 amount with respect to the stock of controlled distributed to sub sec_1_1248_f_-1 distributing controlled and the shareholders of distributing will pay their respective expenses if any incurred in connection with distribution h ctb election sub and controlled will adopt the plan_of_liquidation and the ctb election will occur pursuant to the plan_of_liquidation controlled will be an eligible_entity as defined in sec_301_7701-3 for purposes of making an entity classification election and will not be subject_to the 60-month limitation of sec_301_7701-3 sub on the date of adoption of the plan_of_liquidation and at all times thereafter until the ctb election will own of the single outstanding class of controlled stock and controlled will not have outstanding warrants options convertible securities or other obligations that may be classified as equity for federal_income_tax purposes no shares of controlled will have been redeemed during the three years preceding the ctb election controlled as a corporation will retain no assets following the ctb election plr-138070-13 other than pursuant to the proposed transaction no assets of controlled have been or will be disposed of by either controlled or sub except for dispositions in the ordinary course of business the ctb election 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 controlled if persons holding directly or indirectly more than in value of controlled’s stock as determined by application of sec_318 as modified by sec_304 also hold directly or indirectly more than in value of the stock in the recipient prior to the adoption of the plan_of_liquidation no assets of controlled will have been distributed in_kind transferred or sold to sub except for transactions occurring in the ordinary course of business controlled will report all earned_income represented by assets that will be distributed to sub such as receivables being reported on a cash_basis unfinished construction contracts commissions due etc the fair_market_value of the assets of controlled will exceed its liabilities immediately before and at the date the ctb election is effective at the time of the ctb election there will be no intercorporate debt existing between sub and controlled other than receivables accrued in the ordinary course of business and none will have been cancelled forgiven or discounted at the time of the ctb election there will be no deferred intercompany_item within the meaning of sec_1_1502-13 with respect to the controlled stock all transactions contemplated to be undertaken contemporaneously with in anticipation of in conjunction with or in any way related to the ctb election have been fully disclosed subject_to ruling h sub will include in gross_income as a deemed_dividend the all_earnings_and_profits_amount with respect to its stock of controlled sec_1 b - b i distributions and contributions the distribution of controlled stock by each distributing_corporation to a shareholder is with respect to such shareholder’s ownership of such distributing corporation’s stock any money property or stock contributed or deemed contributed by distributing and distributing to controlled in contribution sec_1 and respectively will be exchanged solely for stock_or_securities of controlled and any cash as described in contribution and the assumption_of_liabilities plr-138070-13 rulings based solely on the information submitted and the representations set forth above and provided that i the distribution of controlled stock to any of the distributing corporations’ shareholders in any of the distributions is with respect to their ownership of distributing stock ii any money property or stock contributed by distributing and distributing to controlled in contribution sec_1 and is exchanged solely for stock_or_securities in controlled and any cash as described in contribution and the assumption_of_liabilities and iii any other transfer of stock money or property between any of the distributing corporations controlled or any of the distributing corporations’ shareholders and any person related to any distributing_corporation controlled or any of the distributing corporations’ shareholders is respected as a separate transaction we rule as follows a contribution and distribution contribution together with distribution will constitute a reorganization within the meaning of sec_368 each of distributing and controlled will be a_party_to_a_reorganization within the meaning of sec_368 no gain_or_loss will be recognized by distributing upon contribution except to the extent of any gain recognized under sec_357 with respect to any excess of liabilities assumed by controlled over the adjusted_basis of the assets contributed to controlled sec_357 and sec_361 b no gain_or_loss will be recognized by controlled in contribution sec_1032 controlled’s basis in each asset received in contribution will be the same as the basis of that asset in the hands of distributing immediately before its transfer increased by the amount of gain if any recognized by distributing in respect of contribution sec_362 controlled’s holding_period in each asset received in contribution will include the period during which distributing held the asset sec_1223 no gain_or_loss will be recognized by and no amount will otherwise be included in the income of distributing upon receipt of the controlled stock in distribution sec_355 no gain_or_loss will be recognized by distributing on distribution sec_361 sec_355 will not treat as other_property any part of the controlled stock actually or deemed issued by controlled to distributing in exchange for the contribution rights transferred to controlled in contribution plr-138070-13 distributing 2’s basis in a share of distributing stock as adjusted under sec_1_358-1 will be allocated between the share of distributing stock with respect to which distribution is made and the share of controlled stock or allocable portions thereof received with respect to the share of distributing stock in proportion to their fair market values in accordance with sec_1_358-2 sec_358 b and c distributing 2’s holding_period in the controlled stock received will include the holding_period of the distributing stock with respect to which distribution is made provided that the distributing stock is held as a capital_asset on distribution date sec_1223 earnings_and_profits if any will be allocated between distributing and controlled in accordance with sec_312 and sec_1_312-10 contribution will be an exchange to which sec_1_367_b_-1 and sec_1_367_b_-4 apply distribution will be an exchange to which sec_1_367_b_-1 sec_1_367_b_-5 and sec_1_367_b_-5 apply if distributing 2’s post-distribution amount as defined in sec_1_367_b_-5 with respect to distributing or controlled is less than its pre- distribution amount as defined in sec_1_367_b_-5 with respect to distributing or controlled distributing 2’s basis in such stock immediately after distribution must be reduced by the amount of the difference however distributing 2’s basis in such stock must not be reduced below zero and to the extent the foregoing reduction would reduce its basis below zero distributing must instead include such amount in income as a deemed_dividend from such corporation such income shall not be foreign personal holding income under sec_954 if distributing reduces the basis in the stock of distributing or controlled or has an inclusion with respect to such stock distributing must increase its basis in the stock of the other corporation to the extent provided in sec_1_367_b_-5 b distribution no gain_or_loss will be recognized by and no amount will be includible in the income of distributing upon its receipt of the stock of controlled in distribution sec_355 no gain_or_loss will be recognized by distributing in distribution sec_355 the basis of the distributing stock and the controlled stock in the hands of distributing immediately after distribution will equal the basis of the distributing stock held by such shareholder immediately prior to distribution allocated between the controlled stock and the distributing stock in proportion to their relative fair market values immediately following distribution in accordance with sec_1_358-2 sec_358 plr-138070-13 the holding_period of the controlled stock received by distributing in distribution will include the holding_period of the distributing stock with respect to which distribution is made provided that the distributing stock is held as a capital_asset on distribution date sec_1223 earnings_and_profits will be allocated between distributing and controlled following distribution in accordance with sec_312 and sec_1_312-10 distribution will be an exchange to which sec_1_367_b_-1 sec_1_367_b_-5 and b -5 c apply if distributing 3’s post-distribution amount as defined in sec_1_367_b_-5 with respect to distributing or controlled is less than its pre- distribution amount as defined in sec_1_367_b_-5 with respect to distributing or controlled distributing 3’s basis in such stock immediately after distribution must be reduced by the amount of the difference however distributing 3’s basis in such stock must not be reduced below zero and to the extent the foregoing reduction would reduce its basis below zero distributing must instead include such amount in income as a deemed_dividend from such corporation such income shall not be foreign personal holding income under sec_954 if distributing reduces the basis in the stock of distributing or controlled or has an inclusion with respect to such stock distributing must increase its basis in the stock of the other corporation to the extent provided in sec_1_367_b_-5 c contribution and distribution contribution and distribution taken together will constitute a reorganization within the meaning of sec_368 each of distributing and controlled will be a party to the reorganization within the meaning of sec_368 no gain_or_loss will be recognized by distributing upon contribution except to the extent of any gain recognized under sec_357 with respect to any excess of liabilities assumed by controlled over the adjusted_basis of the assets contributed to controlled sec_357 and sec_361 and b no gain_or_loss will be recognized by controlled in contribution sec_1032 controlled’s basis in each asset received in contribution will be the same as the basis of that asset in the hands of distributing immediately before its transfer increased by the amount of gain if any recognized by distributing in respect of contribution sec_362 controlled’s holding_period in each asset received in contribution will include the period during which distributing held the asset sec_1223 plr-138070-13 no gain_or_loss will be recognized by and no amount will otherwise be included in the income of distributing upon receipt of the controlled stock in distribution sec_355 no gain_or_loss will be recognized by distributing on distribution sec_361 sec_355 will not treat as other_property any part of the controlled stock actually or deemed issued by controlled to distributing in exchange for the contribution rights transferred to controlled in contribution distributing 4’s basis in a share of distributing stock as adjusted under sec_1_358-1 will be allocated between the share of distributing stock with respect to which distribution is made and the share of controlled stock or allocable portions thereof received with respect to the share of distributing stock in proportion to their fair market values in accordance with sec_1_358-2 sec_358 b and c distributing 4’s holding_period in the controlled stock received will include the holding_period of the distributing stock with respect to which distribution is made provided that the distributing stock is held as a capital_asset on distribution date sec_1223 earnings_and_profits if any will be allocated between distributing and controlled in accordance with sec_312 and sec_1_312-10 contribution will be an exchange to which sec_1_367_b_-1 and sec_1_367_b_-4 apply distribution will be an exchange to which sec_1_367_b_-1 sec_1_367_b_-5 and sec_1_367_b_-5 apply if distributing 4’s post-distribution amount as defined in sec_1_367_b_-5 with respect to distributing or controlled is less than its pre- distribution amount as defined in sec_1_367_b_-5 with respect to distributing or controlled distributing 4’s basis in such stock immediately after distribution must be reduced by the amount of the difference however distributing 4’s basis in such stock must not be reduced below zero and to the extent the foregoing reduction would reduce its basis below zero distributing must instead include such amount in income as a deemed_dividend from such corporation such income shall not be foreign_personal_holding_company_income under sec_954 if distributing reduces the basis in the stock of distributing or controlled or has an inclusion with respect to such stock distributing must increase its basis in the stock of the other corporation to the extent provided in sec_1_367_b_-5 d distribution plr-138070-13 no gain_or_loss will be recognized by and no amount will be includible in the income of distributing and sub upon their receipt of the stock of controlled in distribution sec_355 no gain_or_loss will be recognized by distributing in distribution sec_355 the basis of the distributing stock and the controlled stock in the hands of each of distributing and sub immediately after distribution will equal the basis of the distributing stock held by each such shareholder immediately prior to distribution allocated between the controlled stock and the distributing stock in proportion to their relative fair market values immediately following distribution in accordance with sec_1_358-2 sec_358 the holding_period of the controlled stock received by each of distributing and sub in distribution will include the holding_period of the respective distributing stock with respect to which distribution is made provided that the distributing stock is held as a capital_asset on distribution date sec_1223 earnings_and_profits will be allocated between distributing and controlled following distribution under sec_312 and sec_1_312-10 distribution will be an exchange to which sec_1_367_b_-1 sec_1_367_b_-5 and b -5 c apply if distributing 5’s post-distribution amount as defined in sec_1_367_b_-5 with respect to distributing or controlled is less than its pre- distribution amount as defined in sec_1_367_b_-5 with respect to distributing or controlled distributing 5’s basis in such stock immediately after distribution must be reduced by the amount of the difference however distributing 5’s basis in such stock must not be reduced below zero and to the extent the foregoing reduction would reduce its basis below zero distributing must instead include such amount in income as a deemed_dividend from such corporation such income shall not be foreign_personal_holding_company_income under sec_954 if distributing reduces the basis in the stock of distributing or controlled or has an inclusion with respect to such stock distributing must increase its basis in the stock of the other corporation to the extent provided in sec_1_367_b_-5 distribution will be an exchange to which sec_1_367_b_-1 sec_1_367_b_-5 and b -5 c apply if sub 2’s post-distribution amount as defined in sec_1 b - e with respect to distributing or controlled is less than its pre-distribution amount as defined in sec_1_367_b_-5 with respect to distributing or controlled sub 2’s basis in such stock immediately after distribution must be reduced by the amount of the difference however sub 2’s basis in such stock must not be reduced below zero and to the extent the foregoing reduction would reduce its basis below zero sub must instead include such amount in income as a deemed_dividend from such corporation such income shall not be foreign_personal_holding_company_income under sec_954 if sub reduces the basis in the stock of distributing or controlled or has plr-138070-13 an inclusion with respect to such stock sub must increase its basis in the stock of the other corporation to the extent provided in sec_1_367_b_-5 e distribution no gain_or_loss will be recognized by and no amount will be includible in the income of distributing upon its receipt of the stock of controlled in distribution sec_355 no gain_or_loss will be recognized by distributing in distribution sec_355 unless distributing and distributing elect to apply the provisions of sec_1_1248_f_-2 in accordance with sec_1_1248_f_-2 the basis of the distributing stock and the controlled stock in the hands of distributing immediately after distribution will equal the basis of the distributing stock held by such shareholder immediately prior to distribution allocated between the controlled stock and the distributing stock in proportion to their relative fair market values immediately following distribution in accordance with sec_1_358-2 sec_358 however if distributing and distributing elect to apply the provisions of sec_1_1248_f_-2 in accordance with sec_1_1248_f_-2 distributing 6’s basis in the stock of controlled will be subject_to adjustment in accordance with sec_1_1248_f_-2 unless distributing and distributing elect to apply the provisions of sec_1_1248_f_-2 in accordance with sec_1_1248_f_-2 the holding_period of the controlled stock received by distributing in distribution will include the holding_period of the distributing stock with respect to which distribution is made provided that the distributing stock is held as a capital_asset on distribution date sec_1223 however if distributing and distributing elect to apply the provisions of sec_1 f - b in accordance with sec_1_1248_f_-2 the holding_period for purposes of sec_1248 of the controlled stock received by distributing in distribution will be equal to distributing 5’s holding_period in such stock at the time of distribution earnings_and_profits will be allocated between distributing and controlled following distribution under sec_312 and sec_1_312-10 any amounts included in the gross_income of distributing as a dividend under sec_1248 with respect to controlled stock will not give rise to a basis increase under sec_961 f distribution no gain_or_loss will be recognized by and no amount will be includible in the income of distributing upon its receipt of the stock of controlled stock in distribution sec_355 plr-138070-13 no gain_or_loss will be recognized by distributing in distribution sec_355 unless distributing and distributing elect to apply the provisions of sec_1_1248_f_-2 in accordance with sec_1_1248_f_-2 the basis of the distributing stock and the controlled stock in the hands of distributing immediately after distribution will equal the basis of the distributing stock held by such shareholder immediately prior to distribution allocated between the controlled stock and the distributing stock in proportion to their relative fair market values immediately following distribution in accordance with sec_1_358-2 sec_358 however if distributing and distributing elect to apply the provisions of sec_1_1248_f_-2 in accordance with sec_1_1248_f_-2 distributing 7’s basis in the stock of controlled will be subject_to adjustment in accordance with sec_1_1248_f_-2 unless distributing and distributing elect to apply the provisions of sec_1_1248_f_-2 in accordance with sec_1_1248_f_-2 the holding_period of the controlled stock received by distributing in distribution will include the holding_period of the distributing stock with respect to which distribution is made provided that the distributing stock is held as a capital_asset on distribution date sec_1223 however if distributing and distributing elect to apply the provisions of sec_1 f - b in accordance with sec_1_1248_f_-2 the holding_period for purposes of sec_1248 of the controlled stock received by distributing in distribution will be equal to distributing 6’s holding_period in such stock at the time of distribution earnings_and_profits will be allocated between distributing and controlled following distribution under sec_312 and sec_1_312-10 for purposes of determining any amount includible in the gross_income of distributing as a dividend under sec_1248 there will not be taken into account any e_p attributable to amounts previously included in the gross_income of distributing as a dividend under sec_1248 with respect to controlled stock sec_959 and sec_1248 any amounts included in the gross_income of distributing as a dividend under sec_1248 with respect to controlled stock will not give rise to a basis increase under sec_961 g distribution no gain_or_loss will be recognized by and no amount will be includible in the income of sub upon its receipt of the stock of controlled in distribution sec_355 no gain_or_loss will be recognized by distributing in distribution sec_355 unless distributing and sub elect to apply the provisions of sec_1_1248_f_-2 in accordance with sec_1_1248_f_-2 the basis of the distributing stock and the plr-138070-13 controlled stock in the hands of sub immediately after distribution will equal the basis of the distributing stock held by such shareholder immediately prior to distribution allocated between the controlled stock and the distributing stock in proportion to their relative fair market values immediately following distribution in accordance with sec_1_358-2 sec_358 however if distributing and sub elect to apply the provisions of sec_1_1248_f_-2 in accordance with sec_1_1248_f_-2 sub 1’s basis in the stock of controlled will be subject_to adjustment in accordance with sec_1_1248_f_-2 unless distributing and sub elect to apply the provisions of sec_1_1248_f_-2 in accordance with sec_1_1248-2 the holding_period of the controlled stock received by sub in distribution will include the holding_period of the distributing stock with respect to which distribution is made provided that the distributing stock is held as a capital_asset on distribution date sec_1223 however if distributing and sub elect to apply the provisions of sec_1_1248_f_-2 in accordance with sec_1_1248_f_-2 the holding_period for purposes of sec_1248 of the controlled stock received by sub in distribution will be equal to distributing 7’s holding_period in such stock at the time of distribution earnings_and_profits will be allocated between distributing and controlled following distribution under sec_312 and sec_1_312-10 for purposes of determining any amount includible in the gross_income of distributing as a dividend under sec_1248 there will not be taken into account any e_p attributable to amounts previously included in the gross_income of distributing or distributing as a dividend under sec_1248 with respect to controlled stock sec_959 and sec_1248 any amounts included in the gross_income of distributing as a dividend under sec_1248 with respect to controlled stock will not give rise to a basis increase under sec_961 h ctb election for purposes of determining any amount includible in the gross_income of sub as a dividend under sec_1_367_b_-3 as a result of the ctb election there will not be taken into account any e_p attributable to amounts previously included in the gross_income of distributing distributing or distributing as a dividend under sec_1248 with respect to controlled stock sec_959 and sec_1248 sec_1_367_b_-2 caveats except as expressly provided herein no opinion is expressed or implied concerning the tax consequences of any aspect of any transaction or item discussed or referenced in this letter we express no opinion about the tax treatment of the plr-138070-13 proposed transaction under other provisions of the code and regulations or the tax treatment of any condition existing at the time of or effect resulting from the proposed transaction that are not specifically covered by the above rulings in particular we express no opinion regarding i ii whether each of the distributions satisfies the business_purpose requirement of sec_1_355-2 whether any of the distributions is being used principally as a device for the distribution of e_p of any distributing_corporation or controlled or any combination thereof see sec_355 and sec_1_355-2 iii whether any of the distributions is part of a plan or series of related transactions under sec_355 and sec_1_355-7 pursuant to which one or more persons will acquire directly or indirectly stock representing a or greater interest in any distributing_corporation or controlled iv to the extent not otherwise specifically ruled upon above any other consequences under sec_367 on any transaction in this ruling letter v whether any or all of the above-referenced foreign_corporations is a pfic within the meaning of sec_1297 if it is determined that any such corporation is a pfic no opinion is expressed with respect to the application of sec_1291 through to the proposed transaction in particular in a transaction in which gain is not otherwise recognized regulations under sec_1291 may require gain recognition notwithstanding any other provisions of the code vi whether the transfer of contribution rights or contribution rights constitutes a transfer of assets within the meaning of sec_368 or property within the meaning of sec_351 see revrul_69_156 c b and vii to the extent not otherwise specifically ruled upon any other tax consequences under steps vii or xi procedural statements this ruling is directed only to the taxpayer requesting it sec_6110 of the code provides that it may not be used or cited as precedent a copy of this letter must be attached to any income_tax return to which it is relevant alternatively taxpayers filing their returns electronically may satisfy this requirement by plr-138070-13 attaching a statement to their return that provides the date and control number of this letter_ruling in accordance with the power_of_attorney on file with this office a copy of this letter is being sent to your authorized representative sincerely richard k passales senior counsel branch office of associate chief_counsel corporate cc