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-149525-11 date date legend distributing distributing controlled controlled sub sub sub -------------------- ------------------------------- ---------------------- ---------------------------------- ------------------------------- ---------------------- -------------- ------------------------------- ---------------------- --------------------------- ------------------------------- ---------------------- -------------------------------------- ----------------------------- ---------------------- ------------------------------------- ------------------------------- ---------------------- ----------------------------------------------- ------------------------------- plr-149525-11 sub sub ---------------------- ----------------------------------- ------------------------------- ---------------------- -------------------------------------------- ------------------------------- ---------------------- sub ---------------------------------------------------------------------------------------------------------- --------------------------------------------------------------------------------- ------------------------------- ---------------------- sub sub sub sub sub sub sub sub -------------------- ------------------------------- ---------------------- ------------------- ------------------------------- ---------------------- ---------------------------------------------------------- ------------------------------- ---------------------- ------------------------------------------------------------ ---------------------------------------- ---------------------- --------------------------------------------- ------------------------------- ---------------------- ------------------------ ------------------------------- ---------------------- --------------------------------- ----------------------------- ---------------------- ------------------------------- ------------------------------ plr-149525-11 ---------------------- llc p sec_1 p sec_2 jv fsub fsub fsub fsub fsub fsub fsub ---------------------------------------------- ----------------------------------------------- ---------------------- --------------------------------------------------- -------------------------------------------------------------------------- ---------------------- ---------------------------------------------------- ----------------------------------------------- ---------------------- ------------------------------------------------------- ----------------------------------------------- ---------------------- ----------------------------------------------------------- ------------ ------------ ----------------------- --------------- ---------------------- --------------------- ------------ ---------------------- -------------------- ------------ ---------------------- ----------------------------- --------------------- ------------ ----------------------------------------------------------------- --------------------- ------------ ----------------------------------------------------- --------------------- ------------ plr-149525-11 fsub fsub fsub fsub new fsub fsub new fsub fsub fsub ------------------------------------------ ------------ ---------------------- --------------------------------------- --------------------- ---------------------- --------------------------------------- --------- ---------------------- ------------------------------ --------------------- ---------------------- ------------------------------------------------ --------------------- ------------ ----------------------------------- --------------------- ---------------------- ----------------------------------------------- --------------------- ------------ ------------------------------------------------------ ---------- ------------ -------------------------------- --------------------- ------------ ------------ fsub ------------------------------------------------------ --------------------- fde ------------------------------------------- --------------------- ------------ plr-149525-11 fde fde fde ---------------------------------------- --------- ---------------------- -------------------------------------------------------- ------------ ------------ ------------------------------------ ---------- ------------ fde -------------------------------------------------------------------------------------------------------- --------------------------------------------------------------------------------- ---------- ------------ fde fde fde fde fde fde business a business b -------------------------------- --------------------- ---------------------- ------------------------------------ --------------------- ---------------------- ------------------------------- --------------------- ---------------------- ----------------------------------- --------------------- ---------------------- ----------------------------- --------------------- ---------------------- ------------------------------------- --------------------- ------------------------------------ --------------------------------- ------------------------ plr-149525-11 business c business d business e business f business g -------------------------------------- -------------------------- -------------------------------- -------------------------------- ---------------------------------- transferred businesses ------------------------------------------------------------------------------------------------------------------- --------------------------------------------------------------------------------- --------------------------------------------------------------------------------- retained businesses --------------------------------------------------------------------------------------------------------------- --------------------------------------------------------------------------------- --------------------------------------------------------------------------------- -------------------- state a state b state c state d country a country b country c country d country e country f country g country h country i ------------- ---------- ------------ ------------ ------------ -------------------------- --------- ------------ --------- --------------- ---------- ---------- -------------------------- plr-149525-11 date date date date date date date date date date date date date date a b c d e f g h i ------------------------ ------------------------ -------------------------- ---------------------- ------------------- ---------------------- -------------------------- -------------------------- ------------------------ ------------------------ -------------------------- -------------------------- ------------------ --------------------- ------ -- --- ------ ------ --------- ----------- -------- --- plr-149525-11 j k l m n o ruling_request ---- --- ------------------- ------------------- --- --- --------------------------------------------------------------------------------- -------------------------------------------------------------------------------- ------------------------------------------------------------------------ -------- ----------------------------------------------------------------------- --------- ---------------------------------------------------------------------------- fsub shares ------------------------------------------------------------------------------------------------------------------- --------------------------------------------------------------------------------- ------------ --------------------------------------------------------------------------------- short-term ----------------------------------------------------------------------------------------------------------- intercompany --------------------------------------------------------------------------------------------------------------- obligations --------------------------------------------------------------------------------- ---------------------------------------------------------------------- ---------- ------------------------------------------------------------------------------- - ----------- distributing restricted_stock controlled restricted_stock specified trademarks --------------------------------------------------------------------------------- - ------------------------------------------------------------------------------- --------------- ---------------------- -------------------------------------------------------------------------------- ---------------------------------------------------------------------- ---------- --------------------------------------------------------------------------- ----- ------------------------------------------------------------------------------ --------------------------------------- plr-149525-11 foreign restructuring transactions ------------------------------------------------------------------------------------------------------------------- --------------------------------------------------------------------------------- --------------------------------------------------------------------------------- -------------------------------------------------------------------------------------------------------- --------------------------------------------------------------------------------- ---------------------------------------------------------------------------------------------------------- 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---------------------------------------------------------------------------------------------------------------- --------------------------------------------------------------------------------- ------------ transaction ------------------------------------------------------------------------------------------------------------ --------------------------------------------------------------------------------- ---------------------- debt debt debt debt debt debt debt ------------------------------------------------------------------------- ------------------------------------------------------------------------- -------------------------------------------------------------------------------- ------------------------------ --------------------------------------------------------------------------- ----- --------------------- ------------------------------------------------------------------------------- - ------------------------------ -------------------------------------------------------------------------- ------ ---------------------- -------------------------------------------------------------------------------- ------------------------------ plr-149525-11 debt post-distribution trust transfers working_capital adjustment -------------------------------------------------------------------------- ------ ---------------------- -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- ---------- ---------------------------------------------------------------------- ---------- ------------------------------------------------------------------ -------------- ------------------------------------------------------------------------- ------- ---------------------------------------------------------------------------- ---- -------------------------------------------------------------------------- ------ --------------------------------------------------------------------------------- ---------------------------------------------------------------------- dear --------------- this letter responds to your date letter requesting rulings the rulings on certain federal_income_tax consequences of the proposed transaction defined below the information provided in that letter and in later correspondence is summarized below the rulings contained in this letter are based on facts and representations submitted by the taxpayer and accompanied by a penalties of perjury statement executed by an appropriate party this office has not verified any of the materials submitted in support of the ruling_request 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 i the internal distribution as defined in step lxiii or external distribution as defined in step lxvii satisfies the business_purpose requirement of sec_1_355-2 of the income_tax regulations ii the internal distribution is used principally as a device for the distribution of earnings_and_profits of distributing controlled or both see sec_355 of the internal_revenue_code the code and sec_1_355-2 iii the external distribution is used principally as a device for the distribution of earnings_and_profits of distributing controlled or both see sec_355 and sec_1_355-2 iv the internal distribution is part of a plan or series of related transactions pursuant to which one or more persons will acquire directly or indirectly stock representing a 50-percent_or_greater_interest in distributing plr-149525-11 or controlled see sec_355 and sec_1_355-7 or v the external distribution is part of a plan or series of related transactions pursuant to which one or more persons will acquire directly or indirectly stock representing a 50-percent_or_greater_interest in distributing or controlled see sec_355 and sec_1_355-7 summary of facts distributing is a publicly-traded domestic_corporation organized under the laws of state a and the common parent of an affiliated_group whose includible corporations join in filing a consolidated federal_income_tax return distributing and its subsidiaries the distributing group distributing is a widely-held corporation and no person beneficially own sec_5 or more of the stock thereof the description below reflects the relevant organizational structure immediately before the proposed transaction defined below distributing wholly owns distributing a domestic_corporation organized under the laws of state a distributing wholly owns the following domestic corporations sub sub sub sub and sub each of sub sub sub and sub is organized under the laws of state a and sub is organized under the laws of state b distributing also wholly owns the following foreign entities fsub fde and fde fsub is an entity organized under the laws of country a that is treated as an association_taxable_as_a_corporation for federal_income_tax purposes fde is an entity organized under the laws of country b that is treated as a disregarded_entity for federal_income_tax purposes a disregarded_entity and fde is an entity organized under the laws of country c that is treated as a disregarded_entity distributing also owns sub a domestic_corporation organized under the laws of state c which wholly owns sub a domestic_corporation organized under the laws of state b which wholly owns sub a domestic_corporation organized under the laws of state d sub wholly owns fde an entity organized under the laws of country d that is treated as a disregarded_entity fde wholly owns fsub an entity organized under the laws of country d that is treated as an association_taxable_as_a_corporation for federal_income_tax purposes fsub wholly owns fsub an entity organized under the laws of country e that is treated as an association_taxable_as_a_corporation for federal_income_tax purposes sub wholly owns sub a domestic_corporation that is organized under the laws of state a sub wholly owns sub a domestic_corporation that is organized under the laws of state a sub wholly owns llc a domestic limited_liability_company organized under the laws of state a that is treated as a disregarded_entity sub also wholly owns sub and sub each of which is a domestic_corporation organized under the laws of state a plr-149525-11 llc wholly owns fsub and fde fsub is an entity organized under the laws of country f that is treated as an association_taxable_as_a_corporation for federal_income_tax purposes fsub wholly owns fsub which wholly owns fsub each of fsub and fsub is an entity organized under the laws of country a that is treated as an association_taxable_as_a_corporation for federal_income_tax purposes fsub also owns an a interest in fde an entity organized under the laws of country g that is treated as a disregarded_entity fde is an entity organized under the laws of country h that is treated as a disregarded_entity sub owns b and sub owns the remaining c of the interests in sub a domestic limited_partnership organized under the laws of state a that is treated as an association_taxable_as_a_corporation for federal_income_tax purposes sub wholly owns sub a domestic_corporation organized under the laws of state a sub owns a d interest in p sec_1 a state a unincorporated joint_venture that is treated as a partnership for federal_income_tax purposes the p sec_1 interest parties unrelated to the distributing group own the remaining e interest in p sec_1 fde wholly owns fsub fsub and fsub each of which is an entity organized under the laws of country b that is treated as an association_taxable_as_a_corporation for federal_income_tax purposes fsub owns f of fsub an entity organized under the laws of country b that is treated as an association_taxable_as_a_corporation for federal_income_tax purposes fsub owns the remaining g of fsub fsub wholly owns each of fsub and fsub each of which is organized under the laws of country b and treated as an association_taxable_as_a_corporation for federal_income_tax purposes in addition there are other entities owned directly or indirectly by distributing that are engaging in restructuring transactions in connection with the proposed transaction as described in the ruling_request the distributing group directly engages in businesses a b c d e f and g members of the distributing separate_affiliated_group as defined in sec_355 the distributing sag directly engage in business a which is part of business b members of the distributing separate_affiliated_group as defined in sec_355 the distributing sag directly engage in business a financial information has been submitted indicating that business a has had gross_receipts and operating_expenses representing the active_conduct_of_a_trade_or_business for each of the past five years distributing intends to separate its business activities into two publicly-traded companies more specifically in the proposed transaction distributing will transfer business d which includes business c most of business e business f and most of business g collectively the transferred businesses to controlled and its subsidiaries distributing will retain business b which includes business a a portion of business e and the portion of business g that relates to business b collectively the retained businesses plr-149525-11 members of the controlled separate_affiliated_group as defined in sec_355 the controlled sag which will be part of the controlled separate_affiliated_group as defined in sec_355 the controlled sag following the second contribution defined in step lxv will as a result of the proposed transaction directly engage in business c which is part of business d financial information has been submitted indicating that business c has had gross_receipts and operating_expenses representing the active_conduct_of_a_trade_or_business for each of the past five years the external distribution is motivated in whole or substantial part by the following corporate business purposes i improving strategic and management fit and focus ii providing each business with a more attractive acquisition currency and a more attractive equity for equity-based compensation iii eliminating an internal competition for capital between business b and business d and iv enhancing the ability of each business to attract retain and motivate employees collectively the corporate business purposes following the external distribution controlled will be a publicly-traded corporation and the common parent of an affiliated_group whose includible corporations will join in filing a consolidated federal_income_tax return controlled and its subsidiaries the controlled group distributing and controlled will operate as two independent companies with separate boards of directors distributing anticipates that none of the directors on distributing 2’s board after the external distribution will serve on controlled 2’s board after the external distribution further distributing anticipates that no officer of distributing after the external distribution will serve as an officer employee or member of the board_of controlled after the external distribution and no officer of controlled after the external distribution will serve as an officer employee or member of the board_of distributing after the external distribution in connection with the proposed transaction distributing and its affiliates and controlled and its affiliates will enter into certain agreements and arrangements including i a separation and distribution agreement the separation agreement ii an indemnification agreement iii a tax_sharing_agreement iv an employee matters agreement v a transition services agreement to provide for certain transitional services for a limited period after the external distribution vi a transitional employee agreement relating to transitional services for a limited period before the external distribution for certain employees who will not be transferred to the controlled group until the date of the external distribution vii an agreement relating to intellectual_property described below viii certain transitional real_property agreements the transitional real_property agreements relating to leases and subleases and certain transitional services with respect to certain real_property together with the transitional services mentioned in v and vi above the transitional services and ix certain other agreements and arrangements necessitated by or facilitative of the proposed transaction in addition distributing and controlled expect to enter into certain commercial agreements or possibly to maintain certain plr-149525-11 existing commercial agreements and certain other long-term agreements with respect to certain real_property in each case on terms intended to reflect arm’s-length negotiation including arm’s-length pricing further following the external distribution distributing expects controlled to indemnify the distributing group for any liability incurred by distributing in connection with guarantees of indebtedness and letters of credit relating to the transferred businesses that are unable to be novated transferred or assigned to controlled prior to the external distribution as well as certain other liabilities relating to the transferred businesses and distributing and or distributing may guarantee certain obligations assumed by controlled with respect to certain assets relating to the transferred businesses the agreements and arrangements summarized in this paragraph and described in the ruling_request are collectively referred to as the continuing arrangements the intellectual_property agreement will govern the separation of software patents know how trade secrets and other proprietary information copyrights and trademarks of distributing and its subsidiaries the ip in addition the intellectual_property agreement will provide for certain cross-licenses with respect to certain ip pursuant to which distributing and or its subsidiaries will grant controlled and or other subsidiaries of controlled a perpetual royalty-free license subject_to certain restrictions and exceptions to use certain ip owned by the distributing group after the external distribution and controlled and or its subsidiaries will grant distributing and or other subsidiaries of distributing a perpetual royalty-free license subject_to certain restrictions and exceptions to use certain ip owned by controlled and its direct and indirect subsidiaries after the external distribution the ip licenses further pursuant to the intellectual_property agreement distributing and or its subsidiaries will grant controlled a royalty-free license to use the specified trademarks for a transitional period following the external distribution the trademark license and together with the ip licenses the licenses proposed transaction the following steps constitute the proposed transaction the proposed transaction i on date fsub formed under the laws of country b a new wholly- owned subsidiary new fsub that is treated as an association_taxable_as_a_corporation for federal_income_tax purposes ii on date fsub formed each of fde and fde each with a different name that was thereafter changed as a new entity under the laws of country b that made an initial entity classification election to be treated as a disregarded_entity iii on date distributing formed controlled as a direct wholly-owned subsidiary and distributing formed controlled as a direct wholly-owned subsidiary plr-149525-11 each of controlled and controlled has only one class of stock outstanding the controlled common_stock and the controlled common_stock respectively iv prior to date fsub made a loan to distributing pursuant to a loan facility the facility that had been established on date distributing first drew on the facility on date on date distributing repaid the entire amount due on the facility in full satisfaction of its obligation to fsub v on date controlled formed fsub as a new entity under the laws of country i that is treated as a corporation for federal_income_tax purposes also on date fsub formed fsub as a new entity under the laws of country i that is treated as a corporation for federal_income_tax purposes vi on date fsub formed fde as a new entity under the laws of country b that made an initial entity classification election to be treated as a disregarded_entity vii on date fsub formed each of fde and fde as a new entity under the laws of country i that made an initial entity classification election to be treated as a disregarded_entity viii on date fsub formed under the laws of country b a new wholly owned subsidiary new fsub that is treated as an association_taxable_as_a_corporation for federal_income_tax purposes ix on date fsub sold all of its interests in each of fde and fde to fsub in exchange for cash x effective as of date fsub elected to be treated as a disregarded_entity disregarded fsub the fsub reorganization xi effective as of date fsub elected to be treated as a disregarded_entity the fsub reorganization xii prior to date fsub elected to be treated as a disregarded_entity disregarded fsub conversion xiii effective one day following the effective date of the disregarded_entity election associated with conversion fsub elected to be treated as a disregarded_entity disregarded fsub conversion xiv effective one day following the effective date of the disregarded_entity election associated with conversion fsub elected to be treated as a disregarded_entity disregarded fsub conversion plr-149525-11 xv fsub will transfer all the shares of fsub stock to new fsub in exchange for new fsub stock xvi fsub will transfer all the shares of fsub stock to new fsub in exchange for new fsub stock xvii disregarded fsub will transfer certain assets relating to the retained businesses including interests in certain subsidiaries of disregarded fsub and an intercompany receivable to sub xviii disregarded fsub will transfer a certain assets relating to the retained businesses including interests in certain subsidiaries of disregarded fsub to sub and b an a interest in fde to sub llc following conversion which is defined in step xxxv for no value xix fsub will elect to be treated as a disregarded_entity disregarded fsub steps i xv and xix the fsub reorganization xx fsub will elect to be treated as a disregarded_entity disregarded fsub steps viii xvi and xx the fsub reorganization xxi fsub will sell certain assets to new fsub in exchange for a note of new fsub the new fsub note in an amount intended to be approximately equal to the fair_market_value of the acquired assets the new fsub acquisitions xxii a new fsub will purchase shares of new fsub the new fsub purchase for an amount in cash equal to the net sales proceeds to be received in the fsub asset sale defined below b new fsub will sell all its shares of disregarded fsub the fsub transferred assets to distributing for an amount of cash intended to be approximately equal to the fair_market_value of the net assets of disregarded fsub and the assumption_of_liabilities of disregarded fsub the fsub asset sale new fsub intends to use the sale proceeds to pay for the new fsub purchase xxiii new fsub will sell all its shares of disregarded fsub the fsub transferred assets to distributing for an amount of cash intended to be approximately equal to the fair_market_value of the net assets of disregarded fsub and the assumption_of_liabilities of disregarded fsub the fsub asset sale new fsub intends to use the sale proceeds for one or more of the following purposes a repaying the new fsub note b lending to affiliates c making subsequent asset purchases and developing those properties from affiliates or third parties and d depositing in a bank pooling arrangement that is available to collateralize bank loans to other affiliates for various business activities plr-149525-11 xxiv fde will sell to distributing all its stock of fsub in exchange for cash xxv sub will convert under state a law from a corporation to a limited_liability_company that will be treated as a disregarded_entity sub llc conversion sub llc will transfer all of its assets and liabilities relating to the transferred businesses including its h interest in jv to sub or alternatively following conversion as defined in step xxviii and conversion as defined in step xxxv directly to distributing xxvi sub will convert under state a law from a corporation to a limited_liability_company that will be treated as a disregarded_entity sub llc conversion sub llc will transfer all of its assets and liabilities relating to the retained businesses to distributing xxvii sub will convert under state a law from a corporation to a limited_liability_company that will be treated as a disregarded_entity sub llc conversion xxviii sub will convert under state a law from a corporation to a limited_liability_company that will be treated as a disregarded_entity sub llc conversion sub llc will transfer all of its assets and liabilities relating to the transferred businesses including any assets and liabilities received from sub in step xxv to sub or alternatively following conversion defined in step xxxv directly to distributing xxix distributing will transfer to distributing intercompany receivables from fde4 xxx sub will convert under state a law from a corporation to a limited_liability_company that will be treated as a disregarded_entity sub llc the sub reorganization xxxi one day after the sub reorganization llc will transfer all its assets relating to the transferred businesses including its interests in disregarded fsub to sub llc xxxii sub llc will transfer certain assets relating to the transferred businesses including its interests in disregarded fsub to distributing xxxiii at least one day following the sub reorganization sub will convert under state a law from a corporation to a limited_liability_company that will be treated as a disregarded_entity sub llc the sub reorganization plr-149525-11 xxxiv at least one day following the sub reorganization sub will convert under state a law from a corporation to a limited_liability_company that will be treated as a disregarded_entity sub llc the sub reorganization xxxv sub will convert under state b law from a corporation to a limited_liability_company that will be treated as a disregarded_entity sub llc conversion and together with conversion sec_1 and the conversions sub llc will transfer all of its assets and liabilities relating to the transferred businesses including any assets and liabilities received from sub llc in step xxviii to distributing xxxvi effective at least one day following the sub reorganization and the sub reorganization sub will elect to be treated as a disregarded_entity disregarded sub the sub reorganization xxxvii at least one day following the effective date of the sub reorganization sub will convert under state a law from a corporation to a limited_liability_company that will be treated as a disregarded_entity sub llc the sub reorganization and together with the fsub reorganization fsub reorganization sub reorganization sub reorganization sub reorganization and sub reorganization the upstream reorganizations and individually an upstream reorganization xxxviii following the sub reorganization the p sec_1 interest will be transferred to sub llc xxxix distributing will contribute its interest in fde to disregarded fsub xl the net receivables and payables of distributing sub llc and llc with various entities will be settled xli sub llc will transfer all its remaining assets relating to the transferred businesses including the p sec_1 interest to distributing xlii as soon as practicable but in no event more than i days after the sub reorganization sub llc will convert under state a law from a limited_liability_company to a corporation new sub the new sub contribution xliii after forming fde as a new entity under the laws of country i that will make an initial entity classification election to be treated as a disregarded_entity distributing will contribute all its interests in disregarded fsub and fde to sub the sub contribution xliv fde will split its interest in disregarded fsub to carve out a separate j interest the limited disregarded fsub interest and amend the rights associated with the limited disregarded fsub interest to limit a dividends to a fixed percentage plr-149525-11 of the investment and b receipts in liquidation to an amount equal to the investment plus a fixed return xlv fde will transfer the limited disregarded fsub interest to distributing in exchange for an amount of cash intended to equal j of the stated capital of disregarded fsub xlvi except for short-term intercompany obligations and obligations incurred pursuant to continuing arrangements any obligations not otherwise settled or resolved in other steps that would result in obligations between the distributing group and the controlled group immediately following the external distribution will be settled the remaining intercompany obligation settlement all or a portion of the remaining intercompany obligation settlement may occur earlier or later in the sequence of steps but still prior to the external distribution xlvii in connection with the internal distribution distributing will contribute certain assets relating to the transferred businesses including assets and liabilities of business c sub disregarded fsub and disregarded fsub but excluding fsub fsub and the interest in p sec_1 which will be transferred as described in step lxii to controlled in actual or constructive exchange for a controlled common_stock maintaining distributing 1’s ownership of of outstanding controlled stock and b the assumption_of_liabilities the first distributing contribution xlviii controlled will transfer to fsub all its interests in disregarded fsub in actual or constructive exchange for fsub stock xlix fsub will transfer to fsub all its interests in disregarded fsub in exchange for stock of fsub and a u s dollar-denominated note of fsub l disregarded fsub will sell its k stock interest in a corporate joint_venture to sub in exchange for cash li sub will contribute a all its interests in fde disregarded fsub and fde and b a foreign currency-denominated note for which fde is the debtor and sub is the creditor to fsub in exchange for the fsub shares the sub fsub contribution lii fsub will transfer to fde all its interests in disregarded fsub disregarded fsub and fde in actual or constructive exchange for stock of fde and foreign currency-denominated notes of fde liii fsub will transfer to fde the foreign currency-denominated notes of fde received in step lii plr-149525-11 liv fsub will transfer to fde the foreign currency-denominated note of fde received from sub in step li lv fde fde will transfer to disregarded fsub all its interests in fsub and lvi in connection with the internal distribution sub llc an entity treated as disregarded from distributing its sole owner will transfer all its assets and liabilities relating to the transferred businesses directly to controlled lvii sub will convert under state b law from a corporation into a limited_liability_company that will be treated as a disregarded_entity sub llc this step may occur earlier in the sequence of steps lviii sub will convert under state c law from a corporation into a limited_liability_company that will be treated as a disregarded_entity sub llc this step may occur earlier in the sequence of steps lix sub llc will distribute all its interests in sub to sub llc which in turn will distribute such interests in sub to distributing this step may occur earlier in the sequence of steps but in all events after the transactions described in steps lvii and lviii lx distributing will contribute cash to sub and to any other direct or indirect subsidiary to be contributed to controlled with respect to which distributing identifies an excess_loss_account ela each such subsidiary an ela subsidiary in an amount intended to be sufficient to eliminate such ela the contributions will either be made directly in the case of any ela subsidiary directly owned by distributing or through relevant intermediate entities in the case of any ela subsidiary indirectly owned by distributing certain contributions pursuant to this step lx may occur earlier in the sequence of steps but in all events such contributions will occur before the respective ela subsidiary is contributed directly or indirectly to controlled lxi sub and each ela subsidiary will make a loan to an entity that will be a direct or indirect subsidiary of controlled following the external distribution certain loans pursuant to this step lxi may occur earlier in the sequence of steps lxii in connection with the internal distribution distributing will contribute all its remaining assets relating to the transferred businesses including the stock of sub to controlled in actual or constructive exchange for a controlled common_stock maintaining distributing 1’s ownership of of outstanding controlled stock and b the assumption_of_liabilities the second distributing contribution and together with the first distributing contribution and the transfer described in step lvi the first contribution as a result of the first contribution controlled and members of the controlled sag will hold assets and liabilities associated with business c plr-149525-11 lxiii distributing will distribute its controlled common_stock to distributing the internal distribution lxiv in connection with the second contribution controlled will incur debt presently intended to be approximately dollar_figurel from unrelated financial institutions or through capital markets transactions the controlled financing to fund the special cash distribution controlled will distribute the special cash distribution defined in step lxv to distributing in the second contribution this step may occur earlier in the sequence of steps lxv in connection with the external distribution distributing will contribute to controlled all the controlled common_stock and possibly cash or other assets in actual or constructive exchange for a controlled common_stock representing of outstanding controlled stock b the assumption_of_liabilities and c all or a portion of the proceeds of the controlled financing as defined in step lxiv the special cash distribution collectively the second contribution the special cash distribution will be used as described in step lxviii the amount of the special cash distribution is presently intended to be approximately dollar_figurem but this amount may be adjusted pursuant to true-up payments between distributing and controlled after the external distribution the net amount of such payments the working_capital adjustment as a result of the second contribution controlled and members of the controlled sag will hold assets and liabilities associated with business c lxvi distributing will transfer the limited disregarded fsub interest to fde in exchange for an amount of cash intended to equal j of the stated capital of disregarded fsub lxvii distributing will distribute all its controlled common_stock pro_rata to holders of distributing common_stock the external distribution in lieu of distributing any fractional shares of controlled common_stock to holders of distributing common_stock a distribution agent will aggregate fractional shares into whole shares sell the whole shares in the open market at prevailing market prices and distribute the aggregate net cash proceeds of the sale pro_rata to each holder who otherwise would have been entitled to a fractional share lxviii distributing will use the proceeds of the special cash distribution and any payment from controlled pursuant to the working_capital adjustment as follows a to make cash distributions to distributing shareholders b to repurchase outstanding distributing common_stock c to repay debt owed by distributing to unrelated third parties or d a combination of a - c in each case prior to or within n months following the external distribution representations plr-149525-11 the conversions the following representations have been made regarding each of the conversions for purposes of this letter with respect to each conversion i subsidiary shall mean the liquidating corporation and ii parent shall mean the corporation receiving the liquidating_distribution a subsidiary and parent will adopt a plan_of_liquidation prior to effecting the conversion the conversion plan_of_liquidation and the date on which the conversion plan_of_liquidation is adopted the conversion plan date and the conversion will occur pursuant to or in accordance with the conversion plan_of_liquidation b on the conversion plan date and at all times thereafter until the conversion is completed parent will own of the single outstanding class of subsidiary stock c no shares of subsidiary stock will have been redeemed during the years preceding the conversion plan date d all transfers from subsidiary to parent that are deemed to occur for federal_income_tax purposes will occur once the conversion is effective e as soon as the conversion is effective subsidiary will cease to be a going concern and it will cease to conduct any activity as a corporation for federal_income_tax purposes f as soon as the conversion is effective all of the stock of subsidiary will be cancelled and it will cease to exist as a corporation for federal_income_tax purposes g subsidiary will retain no assets for federal_income_tax purposes following the conversion h subsidiary will not have acquired assets in any nontaxable_transaction at any time except for i acquisitions occurring more than years prior to the conversion plan date ii transactions comprising steps of the proposed transaction with respect to conversion sec_2 and iii transaction with respect to conversion sec_2 and iv transaction with respect to conversion v transaction with respect to conversion vi transaction with respect to conversion vii transaction with respect to conversion and viii transaction with respect to conversion i except for i dispositions in the ordinary course of business ii dispositions occurring more than years prior to the conversion plan date iii transactions comprising steps of the proposed transaction with respect to all conversions iv transaction and transaction with respect to conversion sec_2 and v transaction with respect to conversion sec_2 and vi transaction with respect to conversion vii transaction with respect to conversion sec_3 and plr-149525-11 viii transaction with respect to conversion and ix transaction with respect to conversion no assets of subsidiary have been or will be disposed of by either subsidiary or parent j except with respect to certain transactions and transactions comprising steps xlvii lxii and lvi of the proposed transaction the conversion will not be preceded or followed by the reincorporation in or transfer or sale to a recipient corporation a recipient of any of the businesses or assets of subsidiary if persons holding directly or indirectly more than in value of the subsidiary 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 recipient controlled has no plan or intention to contribute to any subsidiary of controlled that is or will be treated as a corporation for federal_income_tax purposes any assets received in steps xlvii lxii or lvi that were held by a subsidiary prior to its respective conversion k prior to the conversion plan date no assets of subsidiary will have been distributed in_kind transferred or sold to parent except for i transactions occurring in the ordinary course of business ii transactions occurring more than years prior to the conversion plan date and iii transaction with respect to conversion l subsidiary will report all earned_income represented by assets that will be deemed distributed to parent such as receivables being reported on a cash_basis unfinished construction contracts commissions due etc m the fair_market_value of the assets of subsidiary will exceed its liabilities both at the conversion plan date and immediately prior to the time the conversion is effective n there is no intercorporate debt existing between parent and subsidiary except for i debt with respect to conversion ii debt debt and debt with respect to conversion iii debt and debt with respect to conversion and iv debt and debt with respect to conversion and none has been cancelled forgiven or discounted except in transactions that occurred more than years prior to the conversion plan date any intercorporate debt existing between parent and subsidiary immediately prior to the conversion will be extinguished for federal_income_tax purposes as a result of the conversion o parent is not an organization that is exempt from federal_income_tax under sec_501 or any other provision of the code p all other transactions undertaken contemporaneously with in anticipation of in conjunction with or in any way related to the proposed liquidation of subsidiary have been fully disclosed q with respect to conversion conversion conversion conversion and conversion for any intercompany obligations within the meaning of sec_1 plr-149525-11 g ii that will be transferred in the conversion for federal_income_tax purposes i to the extent an intercompany obligation will be extinguished in the conversion a all of the rights and obligations under the intercompany obligation will be extinguished in an intercompany_transaction under sec_1_1502-13 b all income and deduction amounts with respect to the obligation will have been taken into account before the conversion c the fair_market_value of the obligation will approximately equal the face_amount thereof the adjusted_issue_price thereof and the creditor's adjusted_basis therein and d the debtor's corresponding_item and the creditor's intercompany_item after taking into account the special rules of sec_1_1502-13 with respect to the obligation will offset in amount and ii taking into account the rulings that provide for nonrecognition treatment under sec_332 and sec_337 with respect to each such conversion to the extent an intercompany obligation will not be extinguished in the conversion the conversion will be an intercompany_transaction under sec_1_1502-13 in which no amount of income gain deduction or loss is recognized by the creditor or debtor r any intercompany gain with respect to subsidiary stock will be taken into account upon the deemed liquidation of subsidiary in the respective conversion s with respect to conversion conversion and conversion i for any intercompany debt that will be extinguished in the conversion the fair_market_value of the debt will approximately equal the face_amount thereof the adjusted_issue_price thereof and the creditor’s adjusted_basis therein ii subsidiary will be eligible to elect to be disregarded as an entity separate from its owner under sec_301_7701-1 through iii subsidiary will not distribute any u s real_property interests as defined in sec_1_897-1 in the conversion iv the notice requirements of sec_1_367_b_-1 will be met and v in accordance with sec_1_367_b_-3 sub will include in income as a deemed_dividend the all_earnings_and_profits_amount with respect to its stock of fsub fsub and fsub respectively the fsub reorganization and the fsub asset sale the following representations have been made regarding the fsub reorganization t fsub will receive solely new fsub stock in the fsub reorganization u the fair_market_value of the new fsub stock received by fsub in the fsub reorganization will be approximately equal to the fair_market_value of the fsub stock surrendered in the exchange v immediately following the fsub reorganization fsub will own all of the outstanding new fsub stock and will own such stock solely by reason of its ownership of fsub stock immediately prior to the fsub reorganization plr-149525-11 w immediately following the fsub reorganization and before the earlier of any asset acquisition by new fsub or the fsub asset sale new fsub will possess for federal_income_tax purposes the same assets and liabilities except for i a nominal amount of assets to facilitate its organization as a corporation and ii any assets used to pay expenses_incurred in connection with the fsub reorganization as those possessed by fsub immediately prior to the fsub reorganization the assets used to pay expenses will be less than one percent of the fair_market_value of the net assets of fsub immediately prior to the fsub reorganization other than the deemed_distribution by fsub of the new fsub stock in exchange for fsub 9’s fsub stock in the fsub reorganization no assets will be distributed by fsub simultaneously with the fsub reorganization x at the time of the fsub reorganization fsub will not have outstanding any warrants options convertible securities or any other type of right pursuant to which any person could acquire stock in fsub y new fsub has no plan or intention to reacquire any of its stock issued in the fsub reorganization z all liabilities to which fsub 11’s assets will be subject at the time of the fsub reorganization and all the liabilities of fsub that will be properly treated as being assumed by new fsub in the fsub reorganization as determined under sec_357 will be liabilities that were incurred by fsub in the ordinary course of its business and are associated with the assets transferred from fsub to new fsub aa at the time of the fsub reorganization the fair_market_value of the assets transferred from fsub to new fsub in the fsub reorganization will exceed the sum of the liabilities as determined under sec_357 assumed by new fsub bb fsub fsub and new fsub will each pay its own expenses_incurred in connection with the fsub reorganization cc fsub is not under the jurisdiction of a court in a title_11_or_similar_case within the meaning of sec_368 dd at all times prior to acquiring the assets of fsub in the fsub reorganization i new fsub will have been engaged in no business activity ii new fsub will have had no federal_income_tax attributes attributes described in sec_381 other than those if any related to holding of the assets described in the following clause iii and iii new fsub will have held no assets except for a nominal amount of assets to facilitate its organization as a corporation plr-149525-11 ee fsub will be eligible to be treated as a disregarded_entity under sec_301_7701-2 and sec_301_7701-3 ff fsub will not hold any united_states real_property interests as defined in sec_1_897-1 immediately before the fsub reorganization gg the notice requirements of sec_1_367_b_-1 will be met with respect to the fsub reorganization hh distributing will be a sec_1248 shareholder within the meaning of sec_1_367_b_-2 with respect to fsub immediately before the fsub reorganization and distributing will be a sec_1248 shareholder with respect to new fsub immediately thereafter ii fsub will be a controlled_foreign_corporation within the meaning of sec_957 immediately before the fsub reorganization and new fsub will be a controlled_foreign_corporation immediately thereafter jj at all times before the fsub reorganization fsub was not a passive_foreign_investment_company pfic within the meaning of sec_1297 and new fsub will not be a pfic immediately after the fsub reorganization kk fsub will comply with the requirements of sec_1_367_b_-4 with respect to subsequent exchanges of new fsub stock received in the fsub reorganization ll immediately prior to the fsub reorganization no part of fsub 11’s earnings_and_profits will be comprised of effectively_connected_earnings_and_profits as defined in either sec_884 or sec_884 the following representation has been made regarding the fsub asset sale mm none of fsub 11’s assets will have a basis materially in excess of value at the time of the fsub asset sale and any loss incurred in connection with the fsub asset sale will be deferred under sec_267 the fsub reorganization and the fsub asset sale the following representations have been made regarding the fsub reorganization nn fsub will receive solely new fsub stock in the fsub reorganization plr-149525-11 oo the fair_market_value of the new fsub stock received by fsub in the fsub reorganization will be approximately equal to the fair_market_value of the fsub stock surrendered in the exchange pp immediately following the fsub reorganization fsub will own all of the outstanding new fsub stock and will own such stock solely by reason of its ownership of fsub stock immediately prior to the fsub reorganization qq immediately following the fsub reorganization and before the earlier of the new fsub purchase or the fsub asset sale new fsub will possess for federal_income_tax purposes the same assets and liabilities except for i a nominal amount of assets to facilitate its organization as a corporation and ii any assets used to pay expenses_incurred in connection with the fsub reorganization as those possessed by fsub immediately prior to the fsub reorganization the assets of fsub used to pay expenses will be less than one percent of the fair_market_value of the net assets of fsub immediately prior to the fsub reorganization other than the deemed_distribution by fsub of the new fsub stock in exchange for fsub 9’s fsub stock in the fsub reorganization no assets will be distributed by fsub simultaneously with the fsub reorganization rr at the time of the fsub reorganization fsub will not have outstanding any warrants options convertible securities or any other type of right pursuant to which any person could acquire stock in fsub ss new fsub has no plan or intention to reacquire any of its stock issued in the fsub reorganization tt all liabilities to which fsub 12’s assets will be subject at the time of the fsub reorganization and all the liabilities of fsub that will be properly treated as being assumed by new fsub in the fsub reorganization as determined under sec_357 will be liabilities that were incurred by fsub in the ordinary course of its business and are associated with the assets transferred from fsub to new fsub uu at the time of the fsub reorganization the fair_market_value of the assets transferred from fsub to new fsub in the fsub reorganization will exceed the sum of the liabilities as determined under sec_357 assumed by new fsub vv fsub fsub and new fsub will each pay its own expenses_incurred in connection with the fsub reorganization ww fsub is not under the jurisdiction of a court in a title_11_or_similar_case within the meaning of sec_368 plr-149525-11 xx at all times prior to acquiring the assets of fsub in the fsub reorganization i new fsub will have been engaged in no business activity ii new fsub will have had no federal_income_tax attributes attributes described in sec_381 other than those if any related to holding of the assets described in the following clause iii and iii new fsub will have held no assets except for a nominal amount of assets to facilitate its organization as a corporation yy fsub will be eligible to be treated as a disregarded_entity under sec_301_7701-2 and sec_301_7701-3 zz fsub will not hold any united_states real_property interests as defined in sec_1_897-1 immediately before the fsub reorganization aaa the notice requirements of sec_1_367_b_-1 will be met with respect to the fsub reorganization bbb distributing will be a sec_1248 shareholder within the meaning of sec_1_367_b_-2 with respect to fsub immediately before the fsub reorganization and distributing will be a sec_1248 shareholder with respect to new fsub immediately thereafter ccc fsub will be a controlled_foreign_corporation within the meaning of sec_957 immediately before the fsub reorganization and new fsub will be a controlled_foreign_corporation immediately thereafter ddd at all times before the fsub reorganization fsub was not a pfic within the meaning of sec_1297 and new fsub will not be a pfic immediately after the fsub reorganization eee fsub will comply with the requirements of sec_1_367_b_-4 with respect to subsequent exchanges of new fsub stock received in the fsub reorganization fff immediately prior to the fsub reorganization no part of fsub 12’s earnings_and_profits will be comprised of effectively_connected_earnings_and_profits as defined in either sec_884 or sec_884 the following representation has been made regarding the fsub asset sale ggg none of fsub 12’s assets will have a basis materially in excess of value at the time of the fsub asset sale and any loss incurred in connection with the fsub asset sale will be deferred under sec_267 the upstream reorganizations plr-149525-11 the following representations have been made regarding each of the upstream reorganizations for purposes of this letter with respect to each upstream reorganization i target shall mean the corporation transferring its assets and ii acquiring shall mean the corporation acquiring the target’s assets hhh acquiring will acquire at least of the fair_market_value of the net assets and at least of the fair_market_value of the gross assets held by target immediately prior to the respective upstream reorganization for purposes of this representation amounts used by target to pay its reorganization expenses amounts paid_by target to shareholders who receive cash or other_property and all redemptions and distributions except for regular normal dividends made by target immediately preceding the transfer will be included as assets of target held immediately prior to the respective upstream reorganization during the five-year period ending on the date of the respective upstream reorganization i no person related as defined in sec_1_368-1 to acquiring will have acquired target stock with consideration other than acquiring stock ii no person related to acquiring will have acquired or redeemed target stock with consideration other than acquiring stock or target stock and iii no distribution will have been made with respect to the stock of target other than ordinary normal regular dividend distributions made pursuant to the historic dividend-paying practice of target either directly or through any transaction agreement or arrangement with any other person iii jjj acquiring has no plan or intention to sell or otherwise dispose_of any of the assets of target that will be deemed to be acquired in the respective upstream reorganization except for dispositions made in the ordinary course of business transfers set forth in the proposed transaction or transfers described in sec_368 or sec_1_368-2 kkk the liabilities of target that will be deemed to be assumed by acquiring within the meaning of sec_357 were incurred by target in the ordinary course of its business or in the case of liabilities of target assumed or deemed assumed by target within the meaning of sec_357 from a liquidating subsidiary such liabilities were incurred by such liquidating subsidiary in the ordinary course of its business and are associated with the assets that will be deemed to be transferred to acquiring lll following the respective upstream reorganization acquiring will continue either directly or through one or more members of acquiring’s qualified_group within the meaning of sec_1_368-1 the historic_business of target or will use a significant portion of target’s historic_business_assets in a business mmm acquiring will pay or assume the expenses if any of each party incurred in connection with the respective upstream reorganization in accordance with the guidelines of revrul_73_54 1973_1_cb_189 plr-149525-11 nnn there is no intercorporate indebtedness existing between acquiring and target that was issued or acquired at a discount or that will be settled at a discount ooo no two parties to the respective upstream reorganization are investment companies as defined in sec_368 and iv ppp the total fair_market_value of the assets of target at the time of the respective upstream reorganization will exceed the sum of its liabilities as of such time including any liabilities cancelled extinguished or assumed as determined under sec_357 in connection with the respective upstream reorganization the fair_market_value of the assets of acquiring will exceed the amount of its liabilities immediately after the respective upstream reorganization qqq target is not under the jurisdiction of a court in a title_11_or_similar_case within the meaning of sec_368 rrr items of income gain loss deduction and credit will be taken into account as required by the applicable intercompany_transaction regulations as a result of the respective upstream reorganization see sec_1_1502-13 and -14 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 sss with respect to the sub reorganization the sub reorganization the sub reorganization the sub reorganization and the sub reorganization for any intercompany obligations within the meaning of sec_1_1502-13 that will be transferred in the respective upstream reorganization for federal_income_tax purposes i to the extent an intercompany obligation will be extinguished in the upstream reorganization a all of the rights and obligations under the intercompany obligation will be extinguished in an intercompany_transaction under sec_1_1502-13 b all income and deduction amounts with respect to the obligation will have been taken into account before the respective upstream reorganization c the fair_market_value of the obligation will approximately equal the face_amount thereof the adjusted_issue_price thereof and the creditor's adjusted_basis therein and d the debtor's corresponding_item and the creditor's intercompany_item after taking into account the special rules of sec_1_1502-13 with respect to the obligation will offset in amount and ii taking into account the rulings that provide for nonrecognition treatment under sec_361 with respect to each such upstream reorganization to the extent an intercompany obligation will not be extinguished the respective upstream reorganization will be an intercompany_transaction under sec_1_1502-13 in which no amount of income gain deduction or loss is recognized by the creditor or debtor ttt with respect to any intercompany debt between members of the distributing group that will be extinguished in the fsub reorganization or the fsub reorganization the fair_market_value of the debt will approximately equal the face plr-149525-11 amount thereof the adjusted_issue_price thereof and the creditor’s adjusted_basis therein uuu with respect to the fsub reorganization and the fsub reorganization i the notice requirements of sec_1_367_b_-1 will be met ii neither fsub nor fsub respectively will distribute any u s real_property interests as defined in sec_1_897-1 iii fsub and fsub respectively will be eligible to be treated as a disregarded_entity under sec_301_7701-2 and sec_301_7701-3 and iv sub will include in income as a deemed_dividend the all_earnings_and_profits_amount with respect to its stock of fsub and fsub respectively in accordance with sec_1 b - b vvv sub will comply with the requirements of sec_367 and d that are applicable to sub 2’s transfers to fsub in the sub fsub contribution www no property other than deemed shares of acquiring voting_stock will be issued by acquiring to target as consideration with respect to the respective upstream reorganization the new sub contribution the following representations have been made regarding the new sub contribution xxx a no stock_or_securities will be issued or deemed to be issued for services rendered to or for the benefit of new sub in connection with the proposed transaction and b no stock_or_securities will be issued or deemed to be issued for indebtedness of new sub that is not evidenced by a security or for interest on indebtedness of new sub which accrued on or after the beginning of the holding_period of distributing for the debt yyy the proceeds received in collection of the income items will be included as ordinary_income in computing the taxable_income of new sub zzz the patents or patent applications qualify as property within the meaning of sec_351 aaaa distributing will transfer all substantial rights in such patents or patent applications within the meaning of sec_1235 bbbb distributing will not retain any significant_power_right_or_continuing_interest within the meaning of sec_1253 in the franchises trademarks or trade names being transferred plr-149525-11 cccc none of the stock to be transferred or deemed transferred is sec_306 stock within the meaning of sec_306 dddd the new sub contribution is not the result of the solicitation by a promoter broker or investment house eeee distributing will not retain any rights in the property transferred or deemed transferred to new sub ffff the value of the stock deemed to be received in exchange for accounts_receivable will be equal to the net value of the accounts transferred ie the face_amount of the accounts_receivable previously included in income less the amount of the reserve for bad_debts gggg the adjusted_basis and the fair_market_value of the assets deemed transferred by distributing to new sub will be equal to or exceed the sum of the liabilities to be assumed by new sub within the meaning of sec_357 hhhh the liabilities of distributing deemed to be assumed by new sub within the meaning of sec_357 were incurred in the ordinary course of business by sub or its subsidiaries and are associated with the assets to be transferred iiii immediately before the new sub contribution there will be no indebtedness between new sub and distributing and there will be no indebtedness created in favor of distributing as a result of the new sub contribution jjjj the deemed transfer and exchange will occur under a plan agreed upon before the transaction in which the rights of the parties are defined kkkk all exchanges will occur on approximately the same date llll there is no plan or intention on the part of new sub to redeem or otherwise reacquire any stock or indebtedness to be issued in the new sub contribution mmmm taking into account any issuance of additional shares of new sub stock any issuance of stock for services the exercise of any new sub stock_rights warrants or subscriptions a public offering of new sub stock and the sale exchange transfer by gift or other_disposition of any of the stock of new sub to be received in the exchange distributing will be in control of new sub within the meaning of sec_368 and sec_1504 nnnn distributing will be deemed to receive stock securities or other_property approximately equal to the fair_market_value of the property transferred to new sub plr-149525-11 oooo new sub will remain in existence and retain and use the property transferred to it in a trade_or_business pppp there is no plan or intention by new sub to dispose_of the transferred property other than in the normal course of business operations qqqq each of the parties to the transaction will pay its own expenses if any incurred in connection with the proposed transaction rrrr new sub will not be an investment_company within the meaning of sec_351 and sec_1_351-1 ssss distributing is not under the jurisdiction of a court in a title_11_or_similar_case within the meaning of sec_368 and the stock_or_securities deemed to be received in the exchange will not be used to satisfy the indebtedness of such debtor tttt new sub will not be a personal_service_corporation within the meaning of sec_269a uuuu there is no plan or intention to dispose_of any of the new sub stock to be held by distributing vvvv there is no plan or intention to issue additional shares of new sub stock wwww other than any issuance or deemed issuance of new sub stock new sub will not issue any consideration in exchange for the constructive contribution of assets in the new sub contribution the first contribution and internal distribution the following representations have been made regarding the first contribution and internal distribution xxxx the indebtedness including the short-term intercompany obligations if any owed by controlled or any of its subsidiaries to distributing or any of its subsidiaries after the internal distribution will not constitute stock_or_securities yyyy no part of the consideration to be distributed in the internal distribution will be received by any shareholder of distributing as a creditor employee or in any capacity other than that of a shareholder of distributing zzzz each of distributing and controlled will treat all members of its respective sag as defined in sec_355 as one corporation in determining plr-149525-11 whether it meets the requirements of sec_355 regarding the active_conduct_of_a_trade_or_business aaaaa the five years of financial information submitted on behalf of business a conducted by the distributing sag is representative of the present business operations of business a and with regard to such business there have been no substantial operational changes since the date of the last financial statements submitted bbbbb the five years of financial information submitted on behalf of business c to be conducted by the controlled sag is representative of the present business operations of business c and with regard to such business there have been no substantial operational changes since the date of the last financial statements submitted ccccc the distributing sag neither acquired_business a nor acquired control of an entity conducting business a during the five-year period ending on the date of the internal distribution in a transaction in which gain_or_loss was recognized or treated as recognized in whole or in part except for transaction through the five- year period ending on the date of the internal distribution the distributing sag has been the principal_owner of the goodwill and significant assets of business a and will continue to be the principal_owner following the internal distribution ddddd the controlled sag neither acquired_business c nor acquired control of an entity conducting business c during the five-year period ending on the date of the internal distribution in a transaction in which gain_or_loss was recognized or treated as recognized in whole or in part except for transaction the fsub asset sale and the fsub asset sale through the five-year period ending on the date of the internal distribution the distributing sag has been the principal_owner of the goodwill and significant assets of business c and the controlled sag will be the principal_owner of such goodwill and significant assets following the internal distribution eeeee following the internal distribution the distributing sag will continue the active_conduct of business a and the controlled sag will continue the active_conduct of business c independently and with their separate employees except as provided pursuant to the continuing arrangements fffff the internal distribution will be carried out for the corporate business_purpose of facilitating the external distribution which is being carried out for the corporate business purposes the internal distribution is motivated in whole or in substantial part by this corporate business_purpose ggggg the internal distribution is not being used principally as a device for the distribution of the earnings_and_profits of distributing or controlled or both plr-149525-11 hhhhh for purposes of sec_355 immediately after the internal 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 the date of the internal distribution iiiii for purposes of sec_355 immediately after the internal 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 i acquired by purchase as defined in sec_355 and during the five-year period determined after applying sec_355 ending on the date of the internal distribution or ii attributable to distributions on distributing stock_or_securities that were acquired by purchase as defined in sec_355 and during the five-year period determined after applying sec_355 ending on the date of the internal distribution jjjjj the total fair_market_value of the assets that distributing will transfer to controlled in the first contribution will exceed the sum of i the total liabilities if any assumed within the meaning of sec_357 by controlled in the exchange ii the amount of liabilities if any owed to controlled by distributing that are discharged or extinguished in the exchange and iii the amount of cash and the fair_market_value of the property if any other than stock and securities permitted to be received under sec_361 without the recognition of gain received by distributing from controlled in the exchange the total fair_market_value of the assets of controlled will exceed the amount of its liabilities immediately after the first contribution kkkkk the total adjusted bases of the assets transferred to controlled by distributing in the first contribution will equal or exceed the sum of i any liabilities assumed within the meaning of sec_357 by controlled and ii the total amount of money and the fair_market_value of other_property within the meaning of sec_361 received by distributing and transferred by it to its creditors and shareholders as described in the proposed transaction the aggregate fair_market_value of the assets transferred to controlled in the first contribution will equal or exceed the aggregate adjusted_basis of those assets lllll the liabilities if any to be assumed within the meaning of sec_357 by controlled in the first contribution were incurred in the ordinary course of business and are associated with the assets being transferred mmmmm distributing neither accumulated its receivables nor except pursuant to the elimination or reduction of intercompany balances in connection with the plr-149525-11 proposed transaction made extraordinary payment of its payables in anticipation of the internal distribution nnnnn to the extent any transfer in the first contribution or internal distribution is an early disposition of property for which an investment_credit has been or will be claimed under sec_46 the income_tax_liability for the taxable_year in which the investment_credit_property including any building to which sec_47 applies is transferred will be adjusted pursuant to sec_50 or a or sec_47 as in effect before amendment by public law title 104_stat_1388 if applicable to reflect the early disposition of the property ooooo except for short-term intercompany obligations and indebtedness that may be created in the ordinary course of business or in connection with the continuing arrangements no indebtedness will exist between distributing or any of its subsidiaries and controlled or any of its subsidiaries at the time of or subsequent to the internal distribution all short-term intercompany obligations will be settled in the ordinary course of business and in no event will such obligations be settled later than the date that is n months after the external distribution except for obligations for payables that may be created with respect to transitional services any indebtedness that may be created in the ordinary course of business after the internal distribution or in connection with the continuing arrangements will be entered into on arm’s-length terms ppppp immediately before the external distribution items of income gain loss deduction and credit will be taken into account as required by the applicable intercompany_transaction regulations see sec_1_1502-13 and sec_1 as in effect before the publication of t d 1995_2_cb_147 and as currently in effect sec_1_1502-13 as published by t d further any excess_loss_account of a member in the stock of another member that is required to be taken into account by sec_1_1502-19 will be included in income immediately before the internal distribution at the time of the internal distribution no member of the distributing group is expected to have an excess_loss_account in the controlled common_stock or in the stock of any direct or indirect subsidiary of controlled qqqqq payments made in connection with all continuing transactions between distributing or any of its subsidiaries and controlled or any of its subsidiaries following the internal distribution will be for fair_market_value based on terms and conditions arrived at by parties bargaining at arm’s length except for certain payments made in connection with transitional services and the transitional real_property agreements which may be provided at cost or on all-in cost or cost-plus pricing terms the provision of transitional services and the leasing or sub-leasing of property under the transitional real_property agreements will not exceed o months and any services provided or any leases or sub-leases that extend beyond this transitional period will be on arm’s-length terms plr-149525-11 rrrrr no two parties to the transaction are investment companies as defined in sec_368 and iv sssss the internal 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 or greater interest within the meaning of sec_355 in distributing or controlled including any predecessor or successor of any such corporation ttttt no person will hold immediately after the internal distribution a or greater interest in any disqualified_investment_corporation as defined in sec_355 if such person did not hold such an interest in such corporation immediately before the internal distribution taking into account sec_355 and g uuuuu distributing and controlled and their respective shareholders will each pay their own expenses if any incurred in connection with the internal distribution vvvvv in each case where distributing will be a sec_1248 shareholder within the meaning of sec_1_367_b_-2 with respect to a foreign_corporation immediately before the first contribution controlled will be a sec_1248 shareholder within the meaning of sec_1_367_b_-2 with respect to such foreign_corporation immediately following the first contribution wwwww in each case where a foreign_corporation will be a controlled_foreign_corporation within the meaning of sec_957 of distributing immediately before the first contribution such foreign_corporation will be a controlled_foreign_corporation within the meaning of sec_957 of controlled immediately following the first contribution xxxxx none of the foreign_corporations contributed in the first contribution was a passive_foreign_investment_company pfic within the meaning of sec_1297 at any time before the first contribution and none of the foreign_corporations contributed in the first contribution will be a pfic within the meaning of sec_1297 immediately following the first contribution yyyyy controlled will comply with the requirements of sec_367 and d that are applicable to controlled 1’s transfer to fsub including taking into account fsub 14’s transfer to fsub zzzzz sub will comply with sec_1503 and the regulations thereunder to the extent applicable to the sub fsub contribution aaaaaa distributing will comply with sec_1503 and the regulations thereunder to the extent applicable to the first contribution plr-149525-11 the second contribution and external distribution the following representations have been made regarding the second contribution and external distribution bbbbbb the indebtedness including the short-term intercompany obligations if any owed by controlled or any of its subsidiaries to distributing or any of its subsidiaries after the external distribution will not constitute stock_or_securities cccccc other than shares of controlled restricted_stock received by employees holding distributing restricted_stock no part of the consideration to be distributed in the external distribution will be received by any shareholder of distributing as a creditor employee or in any capacity other than that of a shareholder of distributing any shares of controlled restricted_stock distributed in the external distribution with respect to the distributing restricted_stock will not represent more than of the controlled common_stock outstanding dddddd each of distributing and controlled will treat all members of its respective sag as defined in sec_355 as one corporation in determining whether it meets the requirements of sec_355 regarding the active_conduct_of_a_trade_or_business eeeeee the five years of financial information submitted on behalf of business a conducted by the distributing sag which is part of the distributing sag is representative of the present business operations of business a and with regard to such business there have been no substantial operational changes since the date of the last financial statements submitted ffffff the five years of financial information submitted on behalf of business c to be conducted by the controlled sag which will be part of the controlled sag following the second contribution is representative of the present business operations of business c and with regard to such business there have been no substantial operational changes since the date of the last financial statements submitted gggggg the distributing sag neither acquired_business a nor acquired control of an entity conducting business a during the five-year period ending on the date of the external distribution in a transaction in which gain_or_loss was recognized or treated as recognized in whole or in part except for transaction through the five-year period ending on the date of the external distribution the distributing sag has been the principal_owner of the goodwill and significant assets of business a and will continue to be the principal_owner following the external distribution hhhhhh the controlled sag neither acquired_business c nor acquired control of an entity conducting business c during the five-year period ending on the plr-149525-11 date of the external distribution in a transaction in which gain_or_loss was recognized or treated as recognized in whole or in part except for transaction the fsub asset sale and the fsub asset sale through the five-year period ending on the date of the external distribution the distributing sag has been the principal_owner of the goodwill and significant assets of business c and the controlled sag will be the principal_owner of such goodwill and significant assets following the internal distribution and the second contribution iiiiii following the external distribution the distributing sag will continue the active_conduct of business a and the controlled sag will continue the active_conduct of business c independently and with their separate employees except as provided pursuant to the continuing arrangements jjjjjj the external distribution will be carried out for the following corporate business purposes improving strategic and management fit and focus providing each business with a more attractive acquisition currency and a more attractive equity for equity-based compensation eliminating an internal competition for capital between business b and business d and enhancing the ability of each business to attract retain and motivate employees the external distribution is motivated in whole or in substantial part by one or more of these corporate business purposes kkkkkk the external distribution is not being used principally as a device for the distribution of the earnings_and_profits of distributing or controlled or both llllll the receipt by distributing shareholders of cash in lieu of fractional shares of controlled common_stock is solely for the purpose of avoiding the expense and inconvenience to distributing of issuing fractional shares and does not represent separately bargained for consideration it is intended that the total cash consideration received by the shareholders of distributing will not exceed one percent of the total consideration that will be distributed in the external distribution it is also intended that no distributing shareholder will receive cash in an amount equal to or greater than the value of one full share of controlled common_stock mmmmmm for purposes of sec_355 immediately after the external 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 the date of the external distribution nnnnnn for purposes of sec_355 immediately after the external 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 plr-149525-11 stock entitled to vote or or more of the total value of shares of all classes of controlled stock that was either i acquired by purchase as defined in sec_355 and during the five-year period determined after applying sec_355 ending on the date of the external distribution or ii attributable to distributions on distributing stock_or_securities that were acquired by purchase as defined in sec_355 and during the five-year period determined after applying sec_355 ending on the date of the external distribution oooooo the total fair_market_value of the assets that distributing will transfer to controlled in the second contribution will exceed the sum of i the total liabilities if any assumed within the meaning of sec_357 by controlled in the exchange ii the amount of liabilities if any owed to controlled by distributing that are discharged or extinguished in the exchange and iii the amount of cash and the fair_market_value of the property if any other than stock and securities permitted to be received under sec_361 without the recognition of gain received by distributing from controlled in the exchange the total fair_market_value of the assets of controlled will exceed the amount of its liabilities immediately after the second contribution pppppp the total adjusted bases of the assets transferred to controlled by distributing in the second contribution will equal or exceed the sum of i any liabilities assumed within the meaning of sec_357 by controlled and ii the total amount of money and the fair_market_value of other_property within the meaning of sec_361 received by distributing and transferred by it to its creditors and shareholders as described in the proposed transaction the aggregate fair_market_value of the assets transferred to controlled in the second contribution will equal or exceed the aggregate adjusted_basis of those assets qqqqqq the liabilities if any to be assumed within the meaning of sec_357 by controlled in the second contribution were incurred in the ordinary course of business and are associated with the assets being transferred rrrrrr distributing neither accumulated its receivables nor except pursuant to the elimination or reduction of intercompany balances in connection with the proposed transaction made extraordinary payment of its payables in anticipation of the external distribution ssssss to the extent any transfer in the second contribution or external distribution is an early disposition of property for which an investment_credit has been or will be claimed under sec_46 the income_tax_liability for the taxable_year in which the investment_credit_property including any building to which sec_47 applies is transferred will be adjusted pursuant to sec_50 or a or sec_47 as in effect before amendment by public law title 104_stat_1388 if applicable to reflect the early disposition of the property plr-149525-11 tttttt except for short-term intercompany obligations and indebtedness that may be created in the ordinary course of business or in connection with the continuing arrangements no indebtedness will exist between distributing or any of its subsidiaries and controlled or any of its subsidiaries at the time of or subsequent to the external distribution all short-term intercompany obligations will be settled in the ordinary course of business and in no event will such obligations be settled later than the date that is n months after the external distribution except for obligations for payables that may be created with respect to transitional services any indebtedness that may be created in the ordinary course of business after the external distribution or in connection with the continuing arrangements will be entered into on arm’s-length terms uuuuuu immediately before the external distribution items of income gain loss deduction and credit will be taken into account as required by the applicable intercompany_transaction regulations see sec_1_1502-13 and sec_1 as in effect before the publication of t d 1995_2_cb_147 and as currently in effect sec_1_1502-13 as published by t d further any excess_loss_account of a member in the stock of another member that is required to be taken into account by sec_1_1502-19 will be included in income immediately before the external distribution vvvvvv payments made in connection with all continuing transactions between distributing or any of its subsidiaries and controlled or any of its subsidiaries following the external distribution will be for fair_market_value based on terms and conditions arrived at by parties bargaining at arm’s length except for certain payments made in connection with transitional services and the transitional real_property agreements which may be provided at cost or on all-in cost or cost-plus pricing terms the provision of transitional services and the leasing or sub-leasing of property under the transitional real_property agreements will not exceed o months and any services provided or any leases or sub-leases that extend beyond this transitional period will be on arm’s-length terms wwwwww no two parties to the transaction are investment companies as defined in sec_368 and iv xxxxxx distributing will use the proceeds of the special cash distribution and the working_capital adjustment as follows a to make cash distributions b to repurchase outstanding distributing common_stock c to repay distributing debt or d a combination of a - c in each case prior to or within n months following the external distribution yyyyyy the sum of the distributing debt repaid with the proceeds of the special cash distribution and the working_capital adjustment will not exceed the weighted quarterly average of the debt owed by distributing to unrelated third parties for the twelve-month period ending on the close of business on date the last plr-149525-11 business_day before the date on which the proposed divestiture of business d was first presented to distributing 2’s board_of directors zzzzzz the external distribution is not part of a plan or series of related transactions within the meaning of sec_1_355-7 pursuant to which one or more persons will acquire directly or indirectly stock representing a or greater interest within the meaning of sec_355 in distributing or controlled including any predecessor or successor of any such corporation aaaaaaa no person will hold immediately after the external distribution a or greater interest in any disqualified_investment_corporation as defined in sec_355 if such person did not hold such an interest in such corporation immediately before the external distribution taking into account sec_355 and g bbbbbbb distributing and controlled and their respective shareholders will each pay their own expenses if any incurred in connection with the external distribution ccccccc distributing has not been and will not be a united_states_real_property_holding_corporation as defined in sec_897 at any time during the five-year period ending on the date of the external distribution other representations ddddddd none of the transactions that comprise the proposed transaction will include the transfer of stock in any corporation that has been the u s transferor the transferee foreign_corporation or the transferred corporation with respect to any unexpired gain_recognition_agreement within the meaning of sec_1_367_a_-3 and sec_1_367_a_-8 rulings based solely on the information submitted and the representations set forth above we rule as follows regarding the proposed transaction the conversions each conversion will be treated as a distribution by subsidiary to parent in complete_liquidation under sec_332 no gain_or_loss will be recognized by parent on the deemed receipt of the assets and liabilities of subsidiary pursuant to a conversion sec_332 plr-149525-11 no gain_or_loss will be recognized by subsidiary on the deemed_distribution of its assets and liabilities to parent in a conversion sec_337 b sec_1_332-7 immediately after a conversion parent’s basis in each asset deemed received from subsidiary pursuant to the conversion will equal the basis of such asset in the hands of subsidiary immediately before the conversion sec_334 parent’s holding_period for each asset deemed acquired from subsidiary in a conversion will include the period during which such asset was held by subsidiary sec_1223 parent will succeed to and take into account the items of subsidiary described in sec_381 subject_to the conditions and limitations specified in sec_367 with respect to conversion sec_11 sec_12 and and and the regulations thereunder sec_381 and sec_1_381_a_-1 except to the extent subsidiary’s earnings_and_profits are reflected in parent’s earnings_and_profits and subject_to the conditions and limitations of sec_367 as applicable parent will succeed to and take into account the earnings_and_profits or deficit in earnings_and_profits of subsidiary as of the date of a conversion sec_381 sec_1_381_c_2_-1 and sec_1_1502-33 subject_to the conditions and limitations of sec_367 as applicable any deficit in the earnings_and_profits of subsidiary will be used only to offset earnings_and_profits accumulated after the date of a conversion sec_381 parent will not realize income under sec_61 or sec_1_301-1 with respect to the extinguishment of intercompany debt if any in a conversion see revrul_74_54 1974_1_cb_76 the fsub reorganization and the fsub asset sale for federal_income_tax purposes the fsub reorganization will be treated as a transfer by fsub of its assets to new fsub in exchange for new fsub stock and new fsub 11's assumption of the liabilities of fsub followed by a liquidation of fsub in which the new fsub stock is distributed to fsub in cancellation of its interests in fsub sec_1_367_b_-2 the fsub reorganization will qualify as a reorganization within the meaning of sec_368 fsub and new fsub each will be a_party_to_a_reorganization within the meaning of sec_368 no gain_or_loss will be recognized by fsub on the deemed transfer of all of its assets to new fsub in exchange for new fsub stock and new fsub plr-149525-11 11’s deemed assumption of fsub 11’s liabilities in the fsub reorganization sec_361 and sec_357 no gain_or_loss will be recognized by new fsub on the deemed receipt of fsub 11’s assets in exchange for new fsub stock and new fsub 11’s deemed assumption of fsub 11’s liabilities in the fsub reorganization sec_1032 immediately after the fsub reorganization new fsub 11’s basis in each asset deemed acquired from fsub in the fsub reorganization will equal the basis of such asset in the hands of fsub immediately before the fsub reorganization sec_362 new fsub 11’s holding_period for each asset deemed acquired from fsub in the fsub reorganization will include the period during which such asset was held by fsub sec_1223 no gain_or_loss will be recognized by fsub on the deemed_distribution to fsub of the new fsub stock in the fsub reorganization sec_361 no gain_or_loss will be recognized by fsub on the deemed receipt of new fsub stock in exchange for fsub stock in the fsub reorganization sec_354 immediately after the fsub reorganization fsub 9’s basis in the new fsub stock deemed received in exchange for fsub stock in the fsub reorganization will equal the basis of the fsub stock treated as exchanged therefor sec_358 fsub 9’s holding_period for the new fsub stock deemed received in the fsub reorganization will include the period during which fsub held the fsub stock deemed exchanged therefor provided that fsub holds the fsub stock as a capital_asset on the date of the deemed exchange sec_1223 the fsub reorganization will not result in a closing of the tax_year and new fsub will succeed to and take into account the tax_attributes of fsub enumerated in sec_381 sec_381 and b sec_1_367_b_-7 and -9 sec_1_381_b_-1 new fsub will recognize gain under sec_1001 on the fsub asset sale to the extent the fair_market_value of each of the fsub transferred assets exceeds new fsub 11’s adjusted_basis therein at such time as a result of the fsub asset sale distributing will take a cost_basis under sec_1012 in the fsub transferred assets purchased from new fsub the fsub reorganization and the fsub asset sale plr-149525-11 for federal_income_tax purposes the fsub reorganization will be treated as a transfer by fsub of its assets to new fsub in exchange for new fsub stock and new fsub 12's assumption of the liabilities of fsub followed by a liquidation of fsub in which the new fsub stock is distributed to fsub in cancellation of its interests in fsub sec_1_367_b_-2 the fsub reorganization will qualify as a reorganization within the meaning of sec_368 fsub and new fsub each will be a_party_to_a_reorganization within the meaning of sec_368 no gain_or_loss will be recognized by fsub on the deemed transfer of all of its assets to new fsub in exchange for new fsub stock and new fsub 12’s deemed assumption of fsub 12’s liabilities in the fsub reorganization sec_361 and sec_357 no gain_or_loss will be recognized by new fsub on the deemed receipt of fsub 12’s assets in exchange for new fsub stock and new fsub 12’s deemed assumption of fsub 12’s liabilities in the fsub reorganization sec_1032 immediately after the fsub reorganization new fsub 12’s basis in each asset deemed acquired from fsub in the fsub reorganization will equal the basis of such asset in the hands of fsub immediately before the fsub reorganization sec_362 new fsub 12’s holding_period for each asset deemed acquired from fsub in the fsub reorganization will include the period during which such asset was held by fsub sec_1223 no gain_or_loss will be recognized by fsub on the deemed_distribution to fsub of the new fsub stock in the fsub reorganization sec_361 no gain_or_loss will be recognized by fsub on the deemed receipt of new fsub stock in exchange for fsub stock in the fsub reorganization sec_354 immediately after the fsub reorganization fsub 9’s basis in the new fsub stock deemed received in exchange for fsub stock in the fsub reorganization will equal the basis of the fsub stock treated as exchanged therefor sec_358 fsub 9’s holding_period for the new fsub stock deemed received in the fsub reorganization will include the period during which fsub held the fsub stock deemed exchanged therefor provided that fsub holds the fsub stock as a capital_asset on the date of the deemed exchange sec_1223 plr-149525-11 the fsub reorganization will not result in a closing of the tax_year and new fsub will succeed to and take into account the tax_attributes of fsub enumerated in sec_381 sec_381 and b sec_1_367_b_-7 and -9 sec_1_381_b_-1 new fsub will recognize gain under sec_1001 on the fsub asset sale to the extent the fair_market_value of each of the fsub transferred assets exceeds new fsub 12’s adjusted_basis therein at such time as a result of the fsub asset sale distributing will take a cost_basis under sec_1012 in the fsub transferred assets purchased from new fsub the upstream reorganizations for federal_income_tax purposes each upstream reorganization will be treated as a transfer by target of substantially_all of its assets to acquiring solely in exchange for acquiring voting_stock and acquiring’s assumption of target’s liabilities followed by the distribution by target of the acquiring voting_stock to acquiring in complete_liquidation the deemed transfer by target of substantially_all of its assets to acquiring solely in exchange for acquiring voting_stock and acquiring’s assumption of target’s liabilities followed by the deemed_distribution by target of the acquiring voting_stock to acquiring in complete_liquidation will qualify as a reorganization under sec_368 each upstream reorganization will not be disqualified or recharacterized by reason of the subsequent transfers set forth in the proposed transaction sec_368 sec_1_368-2 target and acquiring each will be a_party_to_a_reorganization within the meaning of sec_368 no gain_or_loss will be recognized by target on the deemed transfer of substantially_all of its assets to acquiring solely in exchange for shares of acquiring voting_stock and acquiring’s deemed assumption of target’s liabilities in an upstream reorganization sec_361 sec_357 no gain_or_loss will be recognized by target on the deemed_distribution of acquiring voting_stock to acquiring in an upstream reorganization sec_361 no gain_or_loss will be recognized by acquiring on the deemed receipt of target’s assets solely in exchange for acquiring voting_stock and acquiring’s deemed assumption of target’s liabilities in an upstream reorganization sec_1032 immediately after an upstream reorganization acquiring’s basis in each asset deemed acquired from target in the upstream reorganization will equal the basis of such asset in the hands of target immediately before the upstream reorganization sec_362 plr-149525-11 acquiring’s holding_period for each asset deemed acquired from target in an upstream reorganization will include the period during which such asset was held by target sec_1223 no gain_or_loss will be recognized by acquiring on the deemed receipt of acquiring voting_stock solely in exchange for target stock in an upstream reorganization sec_354 the taxable_year of target will end on the effective date of the closing of the respective upstream reorganization acquiring will succeed to and take into account the items of target described in sec_381 subject_to the provisions and limitations specified in sec_367 with respect to the fsub and fsub reorganizations and and the regulations thereunder sec_381 and b sec_1_381_a_-1 acquiring will not realize income under sec_61 or sec_1_301-1 with respect to the extinguishment of intercompany debt if any in an upstream reorganization see revrul_74_54 1974_1_cb_76 the new sub contribution for federal_income_tax purposes the new sub contribution will be treated as the transfer by distributing of the assets and liabilities remaining in sub llc after step xli of the proposed transaction to new sub in deemed exchange for new sub stock no gain_or_loss will be recognized by distributing on the deemed transfer of assets and liabilities by distributing to new sub in exchange for new sub stock in the new sub contribution sec_351 and sec_357 no gain_or_loss will be recognized by new sub on the deemed receipt of assets and liabilities from distributing in exchange for new sub stock in the new sub contribution sec_1032 immediately after the new sub contribution distributing 1’s aggregate basis in the new sub stock deemed received in the new sub contribution will equal its aggregate basis in the property deemed contributed to new sub in the new sub contribution decreased by the amount of liabilities other than liabilities described in sec_357 deemed assumed by new sub in the new sub contribution sec_358 and d plr-149525-11 immediately after the new sub contribution new sub 4’s basis in each asset deemed received from distributing in the new sub contribution will equal the basis of such asset in the hands of distributing immediately before the new sub contribution sec_362 distributing 1’s holding_period for the new sub stock deemed received in the new sub contribution will include the period during which distributing held the property deemed contributed to new sub provided that distributing holds such property as a capital_asset on the date of the new sub contribution sec_1223 new sub 4’s holding_period for each asset deemed received from distributing in the new sub contribution will include the period during which such asset was held by distributing sec_1223 the first contribution and internal distribution the first contribution followed by the internal distribution will qualify as a reorganization within the meaning of sec_368 distributing and controlled each will be a_party_to_a_reorganization within the meaning of sec_368 no gain_or_loss will be recognized by distributing on the first contribution sec_357 and sec_361 no gain_or_loss will be recognized by controlled on the first contribution sec_1032 immediately after the first contribution controlled 1’s basis in each asset received from distributing in the first contribution will equal the basis of such asset in the hands of distributing immediately before the first contribution sec_362 controlled 1’s holding_period for each asset received from distributing in the first contribution will include the period during which such asset was held by distributing sec_1223 no gain_or_loss will be recognized by distributing on the distribution to distributing of controlled common_stock in the internal distribution sec_361 no gain_or_loss will be recognized by distributing and no amount will be includible in its income on the receipt of controlled common_stock in the internal distribution sec_355 sec_355 will not treat as other_property any part of the controlled common_stock deemed issued by controlled to distributing in exchange for the licenses transferred to controlled in the first contribution plr-149525-11 the basis of the distributing stock and the controlled common_stock in the hands of distributing immediately after the internal distribution will be the same as the basis of the distributing stock held by distributing immediately before the internal distribution allocated between the stock of distributing and controlled in proportion to the fair_market_value of each in accordance with sec_358 and sec_1 a sec_358 c distributing 2’s holding_period for the controlled common_stock received in the internal distribution will include the period during which distributing held the distributing stock on which the internal distribution is made provided that distributing holds such distributing stock as a capital_asset on the date of the internal distribution sec_1223 earnings_and_profits will be allocated between distributing and controlled in accordance with sec_312 sec_1_312-10 and c and sec_1_1502-33 except for purposes of sec_355 any asset transfers or other_payments between distributing or its grantor trusts and controlled or its grantor trusts pursuant to the post-distribution trust transfers and any payments between distributing or its affiliates and controlled or its affiliates under any of the continuing arrangements regarding liabilities indemnities or other obligations that i have arisen or will arise for a taxable_period ending on or before the internal distribution and ii will not become fixed and ascertainable until after the internal distribution will be treated as occurring before the internal distribution see 344_us_6 tax character of later transaction will derive from earlier related transaction revrul_83_73 1983_1_cb_84 revrul_2002_1 2002_1_cb_268 the earnings_and_profits of each controlled_foreign_corporation within the meaning of sec_957 transferred by distributing to controlled in the first contribution to the extent attributable to distributing under sec_1_1248-2 or sec_1_1248-3 whichever is applicable that were accumulated in tax years of such controlled_foreign_corporation beginning after date and during the period in which each such corporation was a controlled_foreign_corporation will be attributable to such stock held by controlled sec_1_1248-1 the second contribution and external distribution the second contribution including the receipt of the special cash distribution and any payment by controlled to distributing pursuant to the working_capital adjustment followed by the external distribution will qualify as a reorganization within the meaning of sec_368 distributing and controlled each will be a_party_to_a_reorganization within the meaning of sec_368 provided that the proceeds of the special cash distribution and the amount of any payment by controlled to distributing pursuant to the working_capital plr-149525-11 adjustment are used as described above no gain_or_loss will be recognized by distributing and no amount will be includible in its income on the second contribution including the receipt of the special cash distribution and any payment by controlled to distributing pursuant to the working_capital adjustment sec_357 and sec_361 and b no gain_or_loss will be recognized by controlled on the second contribution sec_1032 immediately after the second contribution controlled 2’s basis in each asset received from distributing in the second contribution will equal the basis of such asset in the hands of distributing immediately before the second contribution sec_362 controlled 2’s holding_period for each asset received from distributing in the second contribution will include the period during which such asset was held by distributing sec_1223 no gain_or_loss will be recognized by distributing on the distribution to its shareholders of controlled common_stock in the external distribution sec_361 no gain_or_loss will be recognized by distributing 2’s shareholders and no amount will be includible in their income on the receipt of controlled common_stock in the external distribution sec_355 the basis of the distributing common_stock and the controlled common_stock in the hands of each distributing shareholder immediately after the external distribution including any fractional share interest in controlled common_stock to which the shareholder may be entitled will be the same as the basis of the distributing common_stock held by such distributing shareholder immediately before the external distribution allocated between the stock of distributing and controlled in proportion to the fair_market_value of each in accordance with sec_358 and sec_1_358-2 sec_358 c the holding_period for the controlled common_stock received by each distributing shareholder in the external distribution including any fractional share interest in controlled common_stock to which the shareholder may be entitled will include the period during which such shareholder held the distributing common_stock on which the external distribution is made provided that such shareholder holds such distributing common_stock as a capital_asset on the date of the external distribution sec_1223 earnings_and_profits will be allocated between distributing and controlled in accordance with sec_312 sec_1_312-10 and c and sec_1_1502-33 plr-149525-11 the receipt by distributing shareholders of cash in lieu of fractional shares of controlled common_stock will be treated for federal_income_tax purposes as if the fractional shares had been distributed to the distributing shareholders as part of the external distribution and then had been disposed of by such shareholders for the amount of such cash in a sale_or_exchange the gain_or_loss recognized if any determined using the bases allocated to the fractional shares in ruling will be treated as capital_gain or loss provided the stock is held as a capital_asset by the selling shareholder sec_1001 and sec_1221 such gain_or_loss will be short-term or long-term_capital_gain or loss determined using the holding_period provided in ruling except for purposes of sec_355 payments between distributing and controlled pursuant to the working_capital adjustment and any payments between distributing or its affiliates and controlled or its affiliates under any of the continuing arrangements regarding liabilities indemnities or other obligations that i have arisen or will arise for a taxable_period ending on or before the external distribution and ii will not become fixed and ascertainable until after the external distribution will be treated as occurring before the external distribution see 344_us_6 tax character of later transaction will derive from earlier related transaction revrul_83_73 1983_1_cb_84 revrul_2002_1 2002_1_cb_268 following the external distribution controlled will not be a successor to distributing for purposes of sec_1504 therefore controlled and its direct and indirect subsidiaries that are includible corporations under sec_1504 and satisfy the ownership requirements of sec_1504 will be members of an affiliated_group_of_corporations entitled to file a consolidated federal_income_tax return with controlled as the common parent immediately following the external distribution plr-149525-11 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 or any other restructuring activity not specifically described above we express no opinion about the tax treatment of the 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 transactions that is not specifically covered by the above rulings in particular no opinion is expressed or implied regarding i ii whether the internal distribution or the external distribution satisfies the business_purpose requirement of sec_1_355-2 whether the internal distribution is being used principally as a device for the distribution of the earnings_and_profits of distributing controlled or both see sec_355 and sec_1_355-2 iii whether the external distribution is being used principally as a device for the distribution of the earnings_and_profits of distributing controlled or both see sec_355 and sec_1_355-2 iv whether the internal distribution or the external distribution and any acquisition or acquisitions are part of a plan or series of related transactions under sec_355 v the federal_income_tax consequences of the loan from fsub to distributing in step iv the creditability of any foreign taxes paid_or_accrued by fsub or the extent to which sec_960 limits the amount of such foreign taxes that are deemed paid under sec_902 by reason of sec_960 vi whether the transfer of the licenses in the first contribution constitutes a transfer of property see revrul_69_156 c b vii the federal_income_tax consequences of the transactions including the tax consequences under subchapter_k of any aspect of transaction viii the federal_income_tax consequences of the foreign restructuring transactions ix the federal_income_tax consequences under subchapter_k of a any aspect of fde 3’s transfer of the limited disregarded fsub interest to distributing in exchange for cash in step xlv including whether a partnership for federal tax purposes is created b sub 15’s transfer to plr-149525-11 fde of all its interests in fde in step lii including but not limited to the application of sec_708 sec_751 and sec_752 see revrul_84_53 c b and whether a partnership for federal tax purposes is created or c distributing 2’s transfer of the limited disregarded fsub interest to fde in exchange for cash in step lxvi see revrul_99_6 1999_1_cb_432 and revrul_84_111 c b x the federal_income_tax consequences under subchapter_k of any aspect of distributing 2’s deemed transfer of its interest in p sec_2 as a result of the new sub contribution in step xlii including but not limited to sec_708 sec_751 and sec_752 see revrul_84_53 c b xi the federal_income_tax treatment of any captive insurance arrangements xii whether income gain_or_loss will be recognized upon settlement of any short-term intercompany obligations any indebtedness that may be created in the ordinary course of business or any indebtedness created in connection with the continuing arrangements and or xiii the potential application of sec_482 to any continuing transactions between distributing or an affiliate thereof and controlled or an affiliate thereof that will be performed at cost or on an all-in cost or a cost-plus basis procedural statements this letter_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_ruling must be attached to any income_tax return to which it is relevant alternatively a taxpayer filing its return electronically may satisfy this requirement by attaching a statement to its return that provides the date and control number of this letter_ruling in accordance with the power_of_attorney on file in this office a copy of this letter_ruling is being sent to your authorized representatives sincerely mark s jennings branch chief branch office of associate chief_counsel corporate cc