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 b06 plr-127348-11 date date legend distributing -------------------------------------------------------------------------- ------------------------------------------------------------ --------------------------------------------- distributing ---------------------------------- ----------------------------- ------------------------ controlled ----------------------------------------------- ---------------------------------------------- ------------- sub ---------------------------------------------------------- -------------------------------------- ------------------------ sub -------------------------------------------------------------------------- ------------------------------------------------------------ ------------------------------------------------------------------------- sub sub ---------------------------------------------------- -------------------------------- ------------------------ ------------------------------------------------- -------------------------------- ------------------------ plr-127348-11 sub -------------------------------------------------------------------- ------------------------------------------------------------ ------------------------------------------- sub ---------------------------------------------------------------- ------------------------------------------------------------ ------------------------------------------- sub -------------------------------------------------------------------- -------------------------- ------------------------ sub ------------------------------------------- ----------------------------------------------- ------------------------ sub -------------------------------------------------------------------------------- -- ------------------------------------------------------ ------------------------ sub sub sub sub sub sub ------------------------------------------------- --------------------------------- ------------------------ -------------------- ---------------------------------- ------------------------ --------------------- ---------------------------------- ------------------------ ------------------------------ ------------------------------------------------- ------------------------ --------------------------------------------------- ------------------------------ ------------------------ ------------------------------------ plr-127348-11 sub sub sub sub sub sub sub sub ---------------------------- ------------------------ --------------------------------- ---------------------------- ------------------------ ------------------------------------------------- ------------------------------- ------------------------ --------------------------------------------------- ------------------------------- ------------------------ ---------------------------------------- ------------------------------ ------------------------ ------------------------------------------------------- ------------------------------ ------------------------ ------------------------------------------ -------------------------------- ------------------------ --------------------------------- -------------------------------- ------------------------ -------------------------------------------------- ---------------------------- ------------------------ sub ----------------------------------------------- ---------------------------------------------- -------------------------------------------------- llc llc -------------------------- ------------------------------------------------- ------------------------ --------------------------------------------------------- plr-127348-11 llc llc llc llc -------------------------------------------- ------------------------ -------------------------------------------- -------------------------------------------- ------------------------ ----------------------------------------------- ------------------------------------------------- --------------------- --------------------- --------------------------------------------------- --------------------- ----------------------------------------------- ------------------------------------------------------ --------------------- llc -------------------------------------------------------------------------------- -------------------------------------------------------------------------------------------------------------------- ------------------------------------------------------ --------------------- llc llc llc llc llc ---------------------------------- ------------------------------------------------- --------------------- ------------------------- ------------------------------------------------- --------------------- ----------------------------------------------- -------------------------------------------- --------------------- -------------------------------------------------------- ------------------------------------------------ --------------------- ---------------------------------------------------------- ------------------------------------------------ --------------------- plr-127348-11 llc llc llc llc llc llc llc llc llc llc llc ----------------------------------------------- ---------------------------------------------- --------------------- --------------------------------------------- ---------------------------------------------- --------------------- 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--------------------- plr-127348-11 llc llc ----------------------- ----------------------------------------------- --------------------- ------------------------------------------------------------------- ------------------------------------------------------ --------------------- upreit llc -------------------------------------------------------------------------------- ---------------------------------------------------------- --------------- partnership partnership partnership ----------------------------------------- ------------------------------------------------- ------------------------ --------------------------------------- ------------------------------------- ------------------------ -------------------------------------------------- ----------------------------------------- ------------------------ upreit lp -------------------------------------------- ---------------------------------------------------------- --------------- shareholder a shareholder b shareholder c shareholder d shareholder e shareholder f business a ------------------ ------------------------------ ------------------------------ ---------------------- ------------------------------------------------ --------------------------------------------------------------------------------- --------------------- ---------------------------------------------------------------------------- plr-127348-11 business b business c business d competitors licenses taxes expenses type facilities type a facilities facility facility facility facility facility --------------------------------------------------------------------------------- ---------------------------- ---------------------------------------------------------------------------- --------------------------------------------------------------------------------- ---------------------------- ------------------------------------------------------------------- ----------------------- ------------------- ------------------------------------- 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--------------------------------------------------------------------------------- --------------------------------------------------------------------------------- ----------------------------------------------------------- ------------------------ ------------------------------------------ -------------------------------------------------------- -------------------------------------------- --------------------------------------------- plr-127348-11 facility facility facility facility facility facility facility facility position position type c activity structure structure structure specials returns --------------------------------------------- ------------------------------------------- ---------------------------------- --------------------------------------- --------------------------------------------- ----------------------- ------------------------------ -------------------------- --------------------------------------------------------------------- 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--------------------------------------------------------------------------------- ------------------------------------------------ other adjustments --------------------------------------------------------------------------------- ------------------------------------------------------------------- debt debt --------------------------------------------------------------------------------- --------------------------------------------------------------------------------- ---------------- --------------------------------------------------------------------------------- --------------------------------------------------------------------------------- ---------------- plr-127348-11 debt debt debt debt debt --------------------------------------------------------------------------------- --------------------------------------------------------------------------------- ---------------- --------------------------------------------------------------------------------- --------------------------------------------------------------------------------- ---------------- --------------------------------------------------------------------------------- --------------------------------------------------------------------------------- ---------------- --------------------------------------------------------------------------------- --------------------------------------------------------------------------------- ---------------- --------------------------------------------------------------------------------- --------------------------------------------------------------------------------- ---------------- debt ---------------------------------------------------------------------------------- --------------------------------------------------------------------------------- --------------- a b c d e f g h i j ---- -------- ---- ---- ---- -- -- -- ---- ---- plr-127348-11 k l m n subsidiary stock transition services date date year -- -- -- -- 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----------------------------------------------------------------------------------------------------------------- ------------------------------------------------------------------------------------------------ dear ---------------- this letter responds to your date letter requesting rulings on certain federal_income_tax consequences of the proposed transaction defined below the material information submitted in that request and in later correspondence is summarized below the rulings contained in this letter are based on facts and representations submitted by the taxpayer and accompanied by a penalty of perjury statement executed by an appropriate party this office has not verified any of the materials submitted in support of the request for rulings verification of the information representations and other data may be required as part of the audit process in particular this office has not reviewed any information pertaining to and has made no determination regarding whether the internal distribution or external distribution each defined below i satisfies the business_purpose requirement of sec_1_355-2 of the income_tax regulations ii is used principally as a device for the distribution of the earnings_and_profits of distributing distributing or controlled or any or all of them see sec_355 of the internal_revenue_code and sec_1_355-2 or iii is part of a plan or series of related transactions pursuant to which one or more persons will acquire directly or indirectly stock representing a 50-percent_or_greater_interest in distributing distributing or controlled see sec_355 and sec_1 summary of facts distributing is the common parent of an affiliated_group whose includible corporations join in filing a consolidated federal_income_tax return the distributing group the authorized and outstanding capital stock of distributing consists of one class of common_stock that is publicly traded and widely held distributing common_stock and one class of preferred_stock distributing preferred_stock based upon publicly available securities information as of date shareholder a shareholder b and shareholder c were five percent shareholders of distributing common_stock and as of date shareholder d and shareholder e were five percent shareholders of distributing preferred_stock plr-127348-11 distributing wholly owns sub sub sub sub sub sub sub and llc which is treated as an entity that is disregarded as separate from its owner for u s federal_income_tax purposes under sec_301_7701-3 a disregarded_entity and also owns all of the voting interests in sub an unrelated individual individual third party owns all of the non-voting interests in sub and a third-party bank the bank holds a sub warrant sub wholly owns distributing sub and owns an a interest in an operating subsidiary the remaining interest of which is owned by a third party distributing wholly owns sub sub sub sub and various other operating subsidiaries sub wholly owns sub and sub sub owns a b interest in partnership which is treated as a partnership for federal_income_tax purposes the remaining interests in which are held by third parties sub wholly owns sub sub sub sub sub and various other operating subsidiaries sub owns a c interest in partnership which is treated as a partnership for federal_income_tax purposes the remaining interests in which are owned d by distributing and e by sub sub owns a c interest in partnership which is treated as a partnership for federal_income_tax purposes the remaining interests in which are owned d by distributing and e by sub sub wholly owns sub sub sub llc and llc as well as various other operating subsidiaries and disregarded entities each of llc and llc is treated as a disregarded_entity for federal_income_tax purposes each of sub sub and llc owns various disregarded entities controlled will be formed by distributing in connection with the proposed transaction controlled will be authorized to issue common_stock the controlled common_stock and preferred_stock distributing and the members of its separate_affiliated_group as defined in sec_355 the distributing sag directly engage in business a through sub which is part of business b engaged in by the distributing group distributing and the members of its separate_affiliated_group as defined in sec_355 the distributing sag will as a result of the proposed transaction directly engage in business a through sub which is part of business b engaged in by the distributing group controlled and the members of its separate_affiliated_group as defined in sec_355 the controlled sag will as a result of the proposed transaction directly engage in business c through sub which is part of business b engaged in by the distributing group financial information has been submitted indicating that each of business a and 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 distributing group directly or indirectly owns or expects to own prior to effecting the proposed transaction the following type a facilities i facility ii facility iii facility iv facility v facility vi facility vii facility viii plr-127348-11 facility and ix facility each type a facility consists of a structure or multiple structure sec_1 welded bolted or pinned together that serve as a structure upon which a structure or structure sec_3 is constructed to serve as a facility or related facility once each structure that is intended to serve as a structure is transported to the final facility site concrete is typically poured across the top of the structure or structure sec_1 to create a level structure for the structure or structure sec_3 of the facility or related facility once the structure is constructed on the structure or structure sec_1 the entire facility or the related facility resembles a type structure from the outside and inside construction of the structure or structure sec_3 on each type a facility was subject_to local type structure codes and performed under the direction of a licensed contractor each remains subject_to local structure and fire codes is classified as real_property for insurance purposes and is connected to type utilities eg power water sewer and telephone none were intended to be moved after the structure sec_1 were finally positioned and construction was commenced on the structure sec_3 following the external distribution distributing anticipates that there will be f overlapping directors between distributing and controlled and g of the overlapping directors will serve as position and position in addition in connection with the proposed transaction distributing and or its affiliates and controlled and or its affiliates will enter into certain agreements and arrangements including i a separation and distribution agreement ii a tax_sharing_agreement iii an employee matters agreement iv a transition services agreement to provide for certain transition services for a limited period after the external distribution v an agreement relating to intellectual_property which may be a separate agreement or part of the separation and distribution agreement and vi certain other agreements and arrangements as appropriate collectively the transaction agreements as part of the proposed transaction controlled will declare and distribute an all cash distribution or a distribution consisting of a combination of cash and controlled common_stock at the election of each controlled shareholder as discussed below in an amount sufficient to purge all of its e_p accumulated in taxable years prior to its first taxable_year as a reit the purging distribution if the purging distribution is not an all cash distribution each shareholder of controlled will be permitted to elect to receive the shareholder’s entire entitlement under the purging distribution declaration in either money or controlled stock of equivalent value subject_to a limitation on the amount of money to be distributed in the aggregate to all controlled shareholders the cash limitation the cash limitation will in no event be less than of the purging distribution declaration without regard to any cash that may be paid in lieu of fractional shares if too many shareholders elect to receive money each such electing shareholder will receive a pro_rata amount of money corresponding to the shareholder’s respective entitlement under the purging distribution declaration but in no event will any such electing shareholder receive in money less plr-127348-11 than of the shareholder’s entire entitlement the calculation of the number of shares to be received by any shareholder will be determined over a period of up to two weeks ending as close as practicable to the payment_date of the purging distribution based upon a formula utilizing market prices that is designed to equate in value the number of shares to be received with the amount of money that could be received instead proposed transaction for what are represented to be valid business purposes distributing proposes to effect the external distribution defined in step xxxvii the following steps have been proposed collectively the proposed transaction to implement the external distribution i ii iii iv v vi sub will convert to a limited_liability_company llc or merge with and into a newly formed wholly owned llc of distributing llc that is a disregarded_entity the sub liquidation llc will distribute to distributing a portion of accounts_receivable respectively owed by sub sub and sub distributing will contribute its partnership interests in partnership and partnership the lp interests to llc which in turn will contribute the lp interests to distributing sub will convert to an llc or merge with and into a newly formed wholly owned llc of distributing llc that is a disregarded_entity the sub liquidation sub will convert to an llc or merge with and into a newly formed wholly owned llc of distributing llc that is a disregarded_entity the sub liquidation sub will convert to an llc or merge with and into a newly formed wholly owned llc of distributing llc that is a disregarded_entity the sub liquidation in disregarded transactions all disregarded entities owned by sub will merge with and into sub sub will then convert to an llc or merge with and into a newly formed wholly owned llc of sub llc that is a disregarded_entity the sub liquidation following the sub liquidation llc will distribute all type assets to sub vii sub will convert to an llc or merge with and into a newly formed wholly owned llc of distributing llc that is a disregarded_entity the sub liquidation plr-127348-11 viii sub will convert to an llc or merge with and into a newly formed wholly owned llc of sub llc that is a disregarded_entity the sub liquidation ix x xi xii sub will convert to an llc or merge with and into a newly formed wholly owned llc of sub llc that is a disregarded_entity the sub liquidation sub will convert to an llc or merge with and into a newly formed wholly owned llc of sub llc that is a disregarded_entity the sub liquidation sub will convert to an llc or merge with and into a newly formed wholly owned llc of sub llc that is a disregarded_entity the sub liquidation sub will convert to an llc or merge with and into a newly formed wholly owned llc of sub llc that is a disregarded_entity the sub liquidation and together with the sub liquidation the sub liquidation the sub liquidation and the sub liquidation the sub subsidiary liquidations xiii sub will convert to an llc or merge with and into a newly formed wholly owned llc of sub llc that is a disregarded_entity the sub liquidation xiv sub will convert to an llc or merge with and into a newly formed wholly owned llc of sub llc that is a disregarded_entity the sub liquidation and together with the sub liquidation the sub subsidiary liquidations xv distributing will contribute a portion of accounts_receivable owed by each respective recipient to distributing as a result of step i to each of sub sub and sub without taking back any shares of stock of each respective recipient the first receivables contribution after this step xv with respect to each of sub sub and sub the fair_market_value of assets will exceed liabilities xvi sub will contribute the accounts_receivable owed by each respective recipient to sub to each of partnership and partnership xvii the following mergers will be effectuated plr-127348-11 a sub will merge with and into a newly formed wholly owned llc of distributing that is a disregarded_entity llc in constructive exchange for distributing stock the sub cross chain merger as a result each of partnership and partnership will dissolve b sub will merge with and into a newly formed wholly owned llc of distributing that is a disregarded_entity llc in constructive exchange for distributing stock the sub cross chain merger c sub will merge with and into a newly formed wholly owned llc of distributing that is a disregarded_entity llc in constructive exchange for distributing stock the sub cross chain merger d sub will merge with and into a newly formed llc of distributing that is a disregarded_entity llc in constructive exchange for distributing stock the sub cross chain merger and together with the sub cross chain merger sub cross chain merger and sub cross chain merger the cross chain mergers xviii each of llc llc llc llc and llc will distribute type assets to llc each of llc and llc will distribute type assets to llc each of llc llc llc llc and llc will distribute type assets to distributing xix distributing will form controlled and contribute to controlled certain assets including all of the stock of sub and assets distributed to distributing in step xviii in actual or constructive exchange for controlled common_stock and cash the loan proceeds that controlled will borrow from an unrelated syndicate prior to or simultaneously with the contribution of assets the first contribution distributing will hold the loan proceeds in a segregated distributing account pending the distribution of the special dividend distributing will declare a special dividend and distribute the loan proceeds to llc which in turn will distribute such proceeds to distributing which will hold the loan proceeds in a segregated distributing account xx distributing will settle for cash its intercompany obligation to sub xxi sub will transfer all type assets to a newly formed wholly owned llc of sub llc that is a disregarded_entity the sub sale in exchange for the assumption by llc of the liabilities associated with the transferred assets xxii distributing will contribute to llc all intercompany receivables owed by sub to distributing and llc will contribute such receivables to distributing which will contribute such receivables to the capital of sub without taking back plr-127348-11 any additional membership interests of sub the sub receivables contribution as a result the fair_market_value of the assets of sub will exceed liabilities of sub xxiii sub will merge with and into a newly formed wholly owned llc of controlled that is a disregarded_entity llc in constructive exchange for shares of controlled common_stock the sub merger xxiv distributing will contribute to the capital of sub all open account intercompany receivables owed by sub to distributing without taking back any shares of sub stock the sub receivables contribution and together with the first receivables contribution and the sub receivables contribution the receivables contribution as a result the fair_market_value of the assets of sub will exceed liabilities of sub xxv sub will merge with and into a newly formed wholly owned llc of controlled that is a disregarded_entity llc in constructive exchange for shares of controlled common_stock the sub merger together with the sub merger the controlled mergers and together with the cross chain mergers the mergers following the sub merger distributing will contribute a note owed by sub to the capital of controlled which in turn will contribute such note to llc xxvi distributing will distribute all of the stock of controlled to llc which in turn will distribute all of the stock of controlled to distributing the internal distribution xxvii each of llc llc and llc will distribute type assets to distributing xxviii in disregarded transactions all disregarded entities owned by sub will merge with and into sub sub will merge with and into a newly formed wholly owned llc of distributing that is treated as a disregarded_entity llc the sub liquidation and together with the sub subsidiary liquidations the sub subsidiary liquidations the sub liquidation sub liquidation sub liquidation sub liquidation and the sub liquidation are collectively referred to as the liquidations and each individually a liquidation in connection with the sub liquidation any nonvoting membership interests of sub held by individual third party will be redeemed solely in exchange for cash and any warrant of sub held by the bank is expected to be converted into a warrant for an interest in llc pursuant to the terms of the warrant following the sub liquidation in a disregarded transaction llc will distribute all type assets to distributing plr-127348-11 xxix in disregarded transactions all disregarded entities of llc will merge with and into llc xxx in disregarded transactions llc will distribute all type assets to llc which in turn will distribute to distributing all type assets including all of the stock of sub and the membership interests of llc and llc xxxi in a disregarded transaction distributing will contribute to llc all accounts_receivable owed by llc xxxii distributing will contribute to controlled i all type assets including all of the stock of sub and the membership interests of llc and llc and ii all intercompany receivables owed by each of sub and sub to distributing in actual or constructive exchange for shares of controlled common_stock and cash the loan proceeds that controlled will borrow from an unrelated syndicate prior to or simultaneously with the contribution of assets the second contribution distributing will hold the loan proceeds in a distributing segregated account distributing will use the loan and loan proceeds to repay external debt which repayments could include payments of premium interest and associated fees such as consent fees as well as principal xxxiii to establish an upreit structure controlled will form a new limited_partnership that is initially treated as a disregarded_entity upreit lp of which controlled will be the general_partner and a new wholly owned llc that is treated as a disregarded_entity upreit llc will be a limited_partner controlled will contribute assets received in the first contribution the controlled mergers and the second contribution to upreit lp xxxiv any intercompany 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 xxxv distributing will redeem for cash a portion of the outstanding distributing preferred_stock including a portion of the distributing preferred_stock held by shareholder d additional steps may be taken to ensure that controlled does not own directly indirectly or constructively or more of distributing stock by vote or value following the external distribution within the meaning of sec_856 including potential sales or other dispositions of distributing stock by shareholder c and shareholder d certain aspects of this step xxxv may occur earlier or later in the sequence of steps but the redemption of a portion of the distributing preferred_stock will in all events occur prior to the external distribution plr-127348-11 xxxvi upreit lp will contribute all of the stock of the sub transferred entities to sub in exchange for all of the stock of sub xxxvii distributing will i distribute shares of controlled common_stock to shareholder c in exchange for distributing common_stock the shareholder c exchange and ii distribute the remaining shares of controlled common_stock pro_rata to all other distributing shareholders including to shareholder f with respect to distributing preferred_stock the share distribution and together with the shareholder c exchange the external distribution the exchange ratio for the shareholder c exchange will be determined closer to the time of the external distribution immediately before the external distribution the shares of controlled common_stock may be recapitalized into the appropriate number of shares in order to facilitate the external distribution xxxviii immediately after the external distribution distributing and upreit lp will enter into the master lease pursuant to which upreit lp will lease to distributing the leased assets transferred to controlled and further transferred to upreit lp in connection with the proposed transaction prior to entering into the master lease distributing will contribute llc llc llc llc llc and llc to a newly created special purpose entity that will be treated as a disregarded_entity llc xxxix controlled will make the purging distribution by declaring and distributing cash or a combination of controlled stock and cash with the stock portion not to exceed of the fair_market_value of such distributions in an amount sufficient to purge all of its e_p accumulated in taxable years prior to its first taxable_year as a reit xl on its first federal_income_tax return controlled will elect to become a reit for the first taxable_year ending after the date of the external distribution the reit election and controlled together with sub will jointly elect to have sub treated as a taxable_reit_subsidiary within the meaning of sec_856 effective on the first day of the first taxable_year of controlled as a reit as a result of the proposed transaction distributing will be a separate publicly-traded operator and manager of facilities that primarily engages in business b and controlled will be a separate publicly-traded self-administered self-managed reit that primarily engages in business d by leasing facilities pursuant to type c arrangements following the proposed transaction distributing or its subsidiaries will own under local law including relevant regulations related to business b the licenses and the movable furniture fixtures and equipment necessary to operate and manage the facilities except for facility and facility including the associated licenses and movable furniture fixtures and equipment necessary to operate and manage facility and facility which are owned and operated by sub and sub plr-127348-11 collectively the sub transferred entities whose stock was transferred to controlled in the first contribution and the second contribution following the external distribution under a leasing agreement the master lease upreit lp as landlord will generally lease to distributing or a subsidiary that is treated as a disregarded_entity as tenant the type assets excluding the assets owned by the sub transferred entities the leased assets in addition certain development facilities will be added to the portfolio of leased assets under the master lease upon completion the master lease will be a long-term type c arrangement in which distributing will make payments to upreit lp as landlord in respect of the leased assets under the master lease distributing or a subsidiary that is treated as a disregarded_entity will pay upreit lp as defined below an amount consisting of i a fixed annual base_amount the base rent subject_to the escalation and other adjustments and ii an amount based on the net_revenues as defined below from the applicable leased facility or related facility the percentage rent base rent will be a fixed amount for the entire term of the master lease subject_to the escalation and other adjustments base rent will be established at the time the master lease is executed based on two components subject_to the escalation and other adjustments the first component of base rent will be calculated based on the estimated replacement cost of the leased facility or related facility the accumulated depreciation since the last major refurbishment of the leased facility and a specified percentage yield the second component of base rent will be calculated with reference to the projected net_revenues as defined below from the applicable_facility or related facility for year the year projected net_revenues and will equal the product of h or i in the case of facility and facility of j of the year projected net_revenues for the applicable_facility or related facility for the leased assets other than facility and facility subject_to certain exceptions pursuant to the master lease percentage rent will be fixed for k-year periods during the term of the master lease and based on a percentage fixed at the time the master lease is executed for years l through m percentage rent for such leased assets will be a fixed amount equal to the product of a h and b j of the year projected net_revenues for the applicable_facility or related facility the percentage rent for such leased assets will be reset every n years to a fixed amount for the next n-year period equal to the product of a h and b the excess if any of i the average annual net_revenues as defined below from the applicable_facility or related facility for the trailing n-year period over ii j of the year project revenues the percentage rent allowance for such facility for facility and facility percentage rent will vary monthly and will be calculated based on actual monthly net_revenues as defined below for the applicable_facility and a percentage fixed at the time the master lease is executed plr-127348-11 more specifically the monthly percentage rent for facility and facility will equal the product of a i and b the excess if any of i the actual net_revenues as defined below from the applicable_facility for the applicable_month over ii of the percentage rent allowance for the facility for these purposes net_revenues means without duplication i the amount received by distributing and its subsidiaries and sublessees from patrons at the applicable_facility for activity less refunds specials and less returns the activity revenues plus ii gross_receipts of distributing and its subsidiaries and sublessees for all goods and merchandise sold the charges for all services performed or any other revenues generated by distributing and its subsidiaries and sublessees in at or from the leased assets for cash credit or otherwise without reserve or deduction for uncollected amounts but excluding any activity revenues the retail sales less iii the retail value of services at the applicable_facility the promotional allowance in each case subject_to certain adjustments with respect to certain subtenants net_revenues will be calculated on an accrual basis for these purposes as required under applicable generally_accepted_accounting_principles the taxes and expenses such as salaries income taxes employment_taxes supplies equipment cost of goods and inventory rent office overhead marketing and advertising and other general administrative costs will not be deducted in arriving at net_revenues representations the first contribution and internal distribution the following representations have been made regarding the first contribution and the internal distribution a any indebtedness owed by controlled to distributing after the internal distribution will not constitute stock_or_securities b c d no part of the consideration to be distributed by distributing in the internal distribution will be received by a shareholder as a creditor employee or in any capacity other than that of a shareholder of distributing the five years of financial information submitted on behalf of business a as conducted by the distributing sag represents the present operations of the business and regarding the business other than the changes there have been no substantial operational changes since the date of the last financial statements submitted the five years of financial information submitted on behalf of business c as conducted by the controlled sag represents the present operations of the business and regarding the business other than the changes there have been plr-127348-11 e f g h i j k no substantial operational changes since the date of the last financial statements submitted following the internal distribution the distributing sag will continue the active_conduct of business a independently and with its separate employees and will continue to use independent contractors consistent with past practice neither business a conducted by the distributing sag nor control of an entity conducting this business will have been acquired 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 the distributing sag will have been the principal_owner of the goodwill and significant assets of business a throughout the 5-year period ending on the date of the sub cross chain merger following the sub cross chain merger the distributing sag will be the principal_owner of the goodwill and significant assets of business a following the internal distribution the controlled sag will continue the active_conduct of business c independently and with its separate employees and will continue to use independent contractors consistent with past practice neither business c conducted by the controlled sag following the first contribution nor control of an entity conducting this business will have been acquired 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 the distributing sag will have been the principal_owner of the goodwill and significant assets of business c throughout the 5-year period ending on the date of the internal distribution following the internal distribution the controlled sag will be the principal_owner of the goodwill and significant assets of business c the internal distribution will be carried out to facilitate the external distribution the internal distribution is not used principally as a device for the distribution of the earnings_and_profits of distributing or controlled or both the total fair_market_value of the assets transferred to controlled by distributing in the first contribution will exceed the sum of i the amount of liabilities if any assumed within the meaning of sec_357 by controlled in connection with the exchange ii the amount of any liabilities if any owed to controlled by distributing that are discharged or extinguished in connection with the exchange and iii the amount of cash and the fair_market_value of any other_property other than stock and securities permitted to be received under sec_361 without the recognition of gain received by distributing in connection plr-127348-11 l m n o p q r s with the exchange the fair_market_value of the assets of controlled will exceed the amount of its liabilities immediately after the first contribution the total adjusted bases of the assets transferred to controlled by distributing will equal or exceed the liabilities if any assumed as determined under sec_357 by controlled the liabilities if any assumed within the meaning of sec_357 by controlled in the first contribution were incurred in the ordinary course of business and are associated with the assets transferred to controlled in connection with the first contribution other than any trade payables between distributing and its affiliates and controlled and its affiliates arising in the ordinary course of business from continuing transactions no intercorporate debt will exist between distributing and controlled at the time of or subsequent to the internal distribution 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_32_irb_6 and as currently in effect sec_1_1502-13 as published by t d other than with respect to transition services payments made in connection with all continuing transactions if any between distributing and controlled will be intended to be for fair_market_value based on terms and conditions arrived at by the parties bargaining at arm’s length no two parties to the transaction are investment companies as defined in sec_368 and iv 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 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 plr-127348-11 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 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 either corporation immediately after the transaction as defined in sec_355 i any person that holds a or greater interest within the meaning of sec_355 in any disqualified_investment_corporation within the meaning of sec_355 will have held such an interest in such corporation immediately before the transaction or ii neither distributing nor controlled will be a disqualified_investment_corporation within the meaning of sec_355 there is no regulatory legal contractual or economic compulsion or requirement that the lp contribution and sub receivables contribution be made as a condition of the internal distribution although such contributions facilitate nonrecognition treatment for various steps of the proposed transaction for purposes of the preceding sentence the fact that the lp contribution and the sub receivables contribution may be made pursuant to provisions in the separation and distribution agreement shall not be considered contractual compulsion the second contribution and external distribution any indebtedness owed by controlled to distributing after the external distribution will not constitute stock_or_securities the fair_market_value of the controlled stock and other consideration to be received by shareholder c will be approximately equal to the fair_market_value of the distributing stock surrendered by shareholder c in the shareholder c exchange no part of the consideration to be distributed by distributing in the external distribution will be received by a shareholder as a creditor employee or in any capacity other than that of a shareholder of distributing except for potentially restricted shares of controlled stock received by certain distributing employees with respect to restricted shares of distributing stock t u v w x y plr-127348-11 z aa bb cc dd ee the five years of financial information submitted on behalf of business a as conducted by the distributing sag represents the present operations of the business and regarding the business other than the changes there have been no substantial operational changes since the date of the last financial statements submitted the five years of financial information submitted on behalf of business c as conducted by the controlled sag represents the present operations of the business and regarding the business other than the changes there have been no substantial operational changes since the date of the last financial statements submitted following the external distribution the distributing sag will continue the active_conduct of business a independently and with its separate employees and will continue to use independent contractors consistent with past practice neither business a conducted by the distributing sag nor control of an entity conducting this business will have been acquired 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 distributing will have been the principal_owner of the goodwill and significant assets of business a throughout the 5-year period ending on the date of the external distribution following the external distribution the distributing sag will continue to be the principal_owner of the goodwill and significant assets of business a following the external distribution the controlled sag will continue the active_conduct of business c independently and with its separate employees and will continue to use independent contractors consistent with past practice neither business c conducted by the controlled sag following the second contribution nor control of an entity conducting this business will have been acquired 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 the distributing sag will have been the principal_owner of the goodwill and significant assets of business c throughout the 5-year period ending on the date of the external distribution following the external distribution the controlled sag will be the principal_owner of the goodwill and significant assets of business c ff the external distribution is being carried out to facilitate strategic expansion opportunities for business d by providing controlled the ability to i pursue transactions with competitors that would not pursue transactions with distributing ii diversify into different businesses in which distributing as a plr-127348-11 gg hh ii jj kk practical matter could not diversify iii pursue certain transactions that distributing otherwise would be disadvantaged by or precluded from pursuing due to regulatory constraints and iv fund acquisitions with its equity on significantly more favorable terms than those that would be available to distributing the external distribution is motivated in whole or substantial part by one or more of the corporate business purposes the external distribution is not used principally as a device for the distribution of the earnings_and_profits of distributing or controlled or both 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 for purposes of sec_355 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 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 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 either corporation the fair_market_value of the assets transferred to controlled by distributing in the second contribution will exceed the sum of i the amount of liabilities if any assumed within the meaning of sec_357 by controlled in connection with the exchange ii the amount of any liabilities if any owed to controlled by distributing that are discharged or extinguished in connection with the exchange and iii the amount of cash and the fair_market_value of any other_property other than stock and securities permitted to be received under sec_361 without the recognition of gain received by distributing in connection plr-127348-11 ll mm nn oo pp qq rr with the exchange the fair_market_value of the assets of controlled will exceed the amount of its liabilities immediately after the second contribution the total adjusted bases of the assets transferred to controlled by distributing will equal or exceed the liabilities if any assumed as determined under sec_357 by controlled the liabilities if any assumed within the meaning of sec_357 by controlled in the second contribution were incurred in the ordinary course of business and are associated with the assets transferred to controlled in connection with the second contribution other than any trade payables between distributing and its affiliates and controlled and its affiliates arising in the ordinary course of business from continuing transactions no intercorporate debt will exist between distributing and controlled at the time of or subsequent to the external distribution 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_32_irb_6 and as currently in effect sec_1_1502-13 as published by t d other than with respect to certain payments made pursuant to the transaction agreements including payments for transition services payments made in connection with all continuing transactions if any between distributing and controlled will be intended to be for fair_market_value based on terms and conditions arrived at by the parties bargaining at arm’s length no two parties to the transaction are investment companies as defined in sec_368 and iv immediately after the transaction as defined in sec_355 i any person that holds a or greater interest within the meaning of sec_355 in any disqualified_investment_corporation within the meaning of sec_355 will have held such an interest in such corporation immediately before the transaction or ii neither distributing nor controlled will be a disqualified_investment_corporation within the meaning of sec_355 ss distributing has no current plan or intention for third party investors to invest in upreit lp in connection with the proposed transaction plr-127348-11 tt uu vv distributing has not engaged in any discussions or negotiations with any third party investors regarding an investment in upreit lp in connection with the proposed transaction controlled will be an united_states_real_property_holding_corporation usrphc as defined in sec_897 immediately after the external distribution controlled will elect to be taxed and intends to qualify as a reit for the taxable_year including the purging distribution the liquidations the following representations have been made regarding each of the liquidations for purposes of this letter with respect to each of the liquidations subsidiary shall mean the liquidating corporation and parent shall mean the corporation receiving the liquidating_distribution with respect to any subsidiary that converts to an llc or merges with and into a disregarded_entity of parent the following representations are made by taking into account such resulting entity’s disregarded status ww xx yy zz parent on the date of the adoption of the plan_of_liquidation and at all times until the final liquidating_distribution is completed will own at least of the single outstanding class of subsidiary stock other than with respect to the sub liquidation and with respect to the sub liquidation will own at least of the value and voting power of subsidiary stock outstanding no shares of subsidiary stock will have been redeemed during the three years preceding the adoption of the plan of complete_liquidation by subsidiary all distributions from subsidiary to parent pursuant to the plan of complete_liquidation will be made within a single taxable_year of subsidiary the liquidation of subsidiary will be effectuated by means of a conversion of subsidiary into an llc that will be disregarded as separate from parent for federal_income_tax purposes or a state law merger of subsidiary into a limited_liability_company disregarded as separate from parent for u s federal_income_tax purposes accordingly all liquidating distributions will occur at the effective time of the conversion or merger and at the time of the first liquidating_distribution subsidiary will cease to be a going concern and will conduct no further activities aaa subsidiary will retain no assets following the final liquidating_distribution plr-127348-11 bbb ccc ddd eee fff ggg hhh subsidiary will not have acquired assets in any nontaxable_transaction at any time except for i cash contributions in the ordinary course of business that would have occurred without regard to the proposedtransaction with respect to all of the liquidations ii acquisitions pursuant to the proposed transaction iii acquisitions occurring more than three years prior to the date of adoption of the plan_of_liquidation and iv the acquisition transactions no assets of subsidiary have been or will be disposed of by either subsidiary or parent except for i dispositions in the ordinary course of business ii dispositions occurring more than three years prior to adoption of the plan_of_liquidation iii dispositions as part of the proposed transaction and iv the disposition transactions except with respect to transactions comprising steps of the proposed transaction and transfers in the ordinary course of business the liquidation of subsidiary will not be preceded or followed by the reincorporation in or transfer or sale to a recipient corporation recipient of any of the businesses or assets of subsidiary if persons holding directly or indirectly more than in value of the subsidiary stock also hold directly or indirectly more than in value of the stock in recipient for purposes of this representation ownership will be determined by application of the constructive_ownership rules of sec_318 as modified by sec_304 prior to adoption of the liquidation plan no assets of subsidiary will have been distributed in_kind transferred or sold to parent except for i transactions occurring in the normal course of business and ii transactions occurring more than years prior to adoption of the liquidation plan subsidiary will report all earned_income represented by assets that will be distributed to parent such as receivables being reported on a cash_basis unfinished construction contracts commissions due etc the fair_market_value of the assets of subsidiary will exceed its liabilities both at the date of the adoption of the plan of complete_liquidation and immediately prior to the time the first liquidating_distribution is made except for i debt with respect to the sub liquidation ii debt with respect to the sub liquidation iii debt with respect to the sub liquidation iv debt with respect to the sub liquidation v debt with respect to the sub liquidation vi debt with respect to the sub liquidation vii debt with respect to the sub liquidation and viii debt with respect to the sub liquidation there is no intercorporate debt existing between parent and subsidiary and to the best knowledge of distributing none has been cancelled forgiven or discounted except for plr-127348-11 transactions that occurred more than three years prior to the date of adoption of the plan_of_liquidation iii jjj parent is not an organization that is exempt from federal_income_tax under sec_501 or any other provision of the code all other transactions undertaken contemporaneously with in anticipation of in conjunction with or in any way related to the liquidation have been fully disclosed kkk with respect to the sub liquidation the fair_market_value of the consideration received by parent and by the minority shareholder if any for each share of subsidiary stock will approximately equal the fair_market_value of that stock lll with respect to the sub liquidation none of the assets being distributed by subsidiary to the minority shareholder if any i has a fair_market_value greater than its basis in the hands of subsidiary ii is an installment_obligation iii is property described in the recapture provisions of the code or iv is property for which subsidiary obtained a deduction the mergers the following representations have been made regarding the mergers for purposes of this letter with respect to each merger target shall mean the corporation merging out of existence shareholder shall mean a shareholder of target and acquiring shall mean the corporation into which target merges mmm in the merger the following will occur simultaneously as a result of state law i all of the assets and liabilities of target at the effective time of the merger will become the assets and liabilities of acquiring and ii the separate legal existence of target will cease to exist for all purposes nnn continuity_of_proprietary_interest in target will be preserved within the meaning of sec_1_368-1 ooo ppp the merger is being effectuated for the purpose of facilitating the realization of the corporate business purposes of the external distribution acquiring has no plan or intention to sell or otherwise dispose_of any of the assets of target acquired in the transaction except for i dispositions made in the ordinary course of business ii transfers described in sec_368 or sec_1_368-2 or iii the transactions that comprise the proposed transaction plr-127348-11 qqq rrr sss ttt the liabilities of target assumed by acquiring within the meaning of sec_357 were incurred by target in the ordinary course of its business and are associated with the assets to be transferred acquiring will continue the historic_business of target or use a significant portion of target’s historic_business_assets in a business as described in the proposed transaction acquiring and target will pay their respective expenses if any incurred in connection with the merger there is no intercorporate indebtedness existing between target and acquiring that was issued acquired or will be settled at a discount uuu no two parties to the merger are investment companies as defined in sec_368 and iv vvv the total fair_market_value of the assets to be transferred to acquiring by target will exceed the sum of the liabilities of target to be assumed by acquiring within the meaning of sec_357 the fair_market_value of the assets of acquiring will exceed the amount of its liabilities immediately after the merger plus the amount of liabilities if any to which the transferred assets are subject www target is not under the jurisdiction of a court in a title_11_or_similar_case within the meaning of sec_368 other representations xxx yyy zzz distributing has no current plan to move any of the type a facilities each type a facility was designed and constructed to remain permanently in place the terms of the master lease are intended to reflect customary arm’s-length commercial terms and conditions and payments by distributing and or its subsidiaries to upreit lp pursuant to the master lease will be for fair_market_value rulings based solely on the information submitted and the representations set forth above we rule as follows regarding the proposed transaction plr-127348-11 the first contribution and internal distribution the first contribution and the internal distribution taken together will qualify as a reorganization described in sec_368 each of distributing and controlled will be a party to the reorganization within the meaning of sec_368 provided that the loan proceeds are used in the manner described above no gain_or_loss will be recognized by distributing on its actual or constructive receipt of the controlled stock and the loan proceeds in the first contribution sec_357 and sec_361 b no gain_or_loss will be recognized by controlled in the first contribution sec_1032 controlled’s basis in each asset received in the first contribution will be the same as the basis of that asset in the hands of distributing immediately before its transfer sec_362 controlled’s holding_period in each asset received in the first contribution will include the period during which distributing held the asset sec_1223 no gain_or_loss will be recognized by distributing on the internal distribution sec_361 no gain_or_loss will be recognized by and no amount will otherwise be included in the income of distributing upon receipt of the controlled stock in the internal distribution sec_355 distributing 2’s basis in a share of distributing common_stock as adjusted under sec_1_358-1 will be allocated between the share of distributing common_stock with respect to which the internal distribution is made and the share of controlled stock or allocable portions thereof received with respect to the share of distributing common_stock in proportion to their fair market values in accordance with sec_1_358-2 sec_358 b and c distributing 2’s holding_period in the controlled stock received will include the holding_period of the distributing common_stock with respect to which the distribution of the controlled stock is made provided that the distributing common_stock is held as a capital_asset on the date of the internal distribution sec_1223 earnings_and_profits if any will be allocated between distributing and controlled in accordance with sec_312 and sec_1_312-10 and sec_1_1502-33 plr-127348-11 the second contribution and external distribution the second contribution and the external distribution taken together will qualify as a reorganization described in sec_368 each of distributing and controlled will be a party to the reorganization within the meaning of sec_368 provided that the loan proceeds are used in the manner described above no gain_or_loss will be recognized by distributing on its actual or constructive receipt of the controlled stock and the loan proceeds in the second contribution sec_357 and sec_361 b no gain_or_loss will be recognized by controlled in the second contribution sec_1032 controlled’s basis in each asset received in the second contribution will be the same as the basis of that asset in the hands of distributing immediately before its transfer sec_362 controlled’s holding_period in each asset received in the second contribution will include the period during which distributing held the asset sec_1223 no gain_or_loss will be recognized by distributing on the external distribution sec_361 no gain_or_loss will be recognized by and no amount will otherwise be included in the income of the shareholders of distributing upon receipt of the controlled stock in the external distribution sec_355 each distributing shareholder’s basis in a share of distributing common_stock as adjusted under sec_1_358-1 will be allocated between the share of distributing common_stock or distributing preferred_stock with respect to which the share distribution is made and the share of controlled stock or allocable portions thereof received with respect to the share of distributing common_stock in proportion to their fair market values in accordance with sec_1_358-2 sec_358 b and c the basis of the shares of controlled stock received by shareholder c in the shareholder c exchange including any fractional share interest in controlled common_stock to which shareholder c may be entitled will be the same as shareholder c’s basis in the distributing stock surrendered in exchange therefor allocated in the manner described in sec_1_358-2 sec_358 plr-127348-11 each distributing shareholder’s holding_period in the controlled stock received will include the holding_period of the distributing common_stock or distributing preferred_stock with respect to which the distribution of the controlled stock is made provided that the controlled stock is held as a capital_asset on the date of the external distribution sec_1223 earnings_and_profits if any will be allocated between distributing and controlled in accordance with sec_312 and sec_1_312-10 and sec_1_1502-33 a distributing shareholder that receives cash in lieu of a fractional share of controlled stock will recognize gain_or_loss measured by the difference between the basis of the fractional share received as determined above in ruling with respect to the share distribution or in ruling with respect to the shareholder c exchange and the amount of cash received sec_1001 any gain_or_loss will be treated as capital_gain or loss provided the fractional share of stock is held as a capital_asset on the date of the external distribution sec_1221 and sec_1222 neither sub nor any of its subsidiaries will be a successor to distributing for purposes of sec_1504 therefore any subsidiary of distributing that is transferred by controlled to sub that is an includible_corporation under sec_1504 and satisfies the ownership requirements of sec_1504 will be a member_of_an_affiliated_group of corporations and entitled to file a consolidated federal_income_tax return with sub as the common parent except for purposes of sec_355 any post-distribution payments made by distributing or any of its affiliates to controlled or any of its affiliates or vice versa that i have arisen or will arise with respect to a taxable_period ending on or before the date of the external distribution or for a taxable_period beginning on or before and ending after the date of the external distribution and ii will not have become fixed and ascertainable until after the external distribution will be treated as occurring immediately before the external distribution see 344_us_6 revrul_83_73 1983_1_cb_84 the liquidations the liquidation will qualify as a complete_liquidation under sec_332 sec_332 and sec_1_332-2 no gain_or_loss will be recognized by parent on its receipt of subsidiary’s assets and the assumption of subsidiary’s liabilities sec_332 plr-127348-11 no gain_or_loss will be recognized by subsidiary on the distribution of its assets to and the assumption of its liabilities by parent sec_336 and sec_337 parent’s basis in each asset received from subsidiary in the liquidation will be the same as the basis of that asset in the hands of subsidiary immediately before the liquidation sec_334 parent’s holding_period in each asset received from subsidiary in the liquidation will include the period during which that asset was held by subsidiary sec_1223 parent will succeed to and take into account as of the close of the effective date of the liquidation the items of subsidiary described in sec_381 subject_to the conditions and limitations specified in sec_381 sec_382 sec_383 and sec_384 and the regulations thereunder sec_381 and sec_1_381_a_-1 the excess_loss_account if any of parent with respect to the stock of subsidiary will not be recognized as a result of the liquidation sec_1_1502-19 the receivables contribution each contributing parent will increase its basis or reduce its excess_loss_account in its shares of the relevant recipient subsidiary by an amount equal to the adjusted_basis of the relevant contributed debt sec_108 and sec_1016 sec_1_1502-19 for purposes of this letter with respect to the receivables contribution contributed debt means the intercompany receivables contributed in the relevant receivables contribution contributing parent means the parent_corporation contributing the contributed debt in the relevant receivables contribution and recipient subsidiary means the respective debtor_corporation to which the contributed debt is transferred the mergers each of the mergers will qualify as a reorganization within the meaning of sec_368 and target and acquiring will each be a_party_to_a_reorganization under sec_368 no target will recognize gain_or_loss on any of the mergers sec_357 and sec_361 acquiring will recognize no gain_or_loss on its receipt of the assets of target in constructive exchange for acquiring stock sec_1032 plr-127348-11 acquiring’s basis in each asset received in each of the mergers will equal the basis of the asset in the hands of each target immediately prior to the mergers sec_362 acquiring’s holding_period in each asset received in each of the mergers will include the period during which such asset was held by target sec_1223 acquiring will succeed to and take into account as of the close of the effective date of each of the mergers the attributes of each target described in sec_381 subject_to the conditions and limitations specified in sec_381 sec_382 sec_383 and sec_384 and the regulations thereunder sec_381 and sec_1_381_a_-1 no gain_or_loss will be recognized by any shareholder on any of the mergers sec_354 the basis of the acquiring stock constructively received by a shareholder in each of the mergers will i be the same as the shareholder’s basis in the target stock surrendered in the exchange and ii will be adjusted for any allocation to eliminate and equalize an excess_loss_account sec_358 and sec_1_1502-19 each shareholder’s holding_period in the acquiring stock constructively received will include the holding_period of the target stock exchanged therefor provided the target stock is held as a capital_asset on the date of such merger sec_1223 the excess_loss_account if any of any shareholder with respect to its interest in the stock of target will not be recognized as a result of the mergers sec_1 b other rulings sub will realize loss under sec_1001 upon the sub sale to the extent that the adjusted bases of the assets sold by sub exceed their fair_market_value the loss realized by sub upon the sub sale will be taken into account upon the external distribution sec_1_1502-13 f -1 sub will take a cost_basis under sec_1012 in the assets purchased from sub each of the type a facilities will constitute real_property for purposes of sec_856 and sec_856 and a real_estate asset for purposes of sec_856 and sec_856 upreit lp’s receipt of percentage rent payments under the master lease and the specified adjustments to amounts payable under the master lease pursuant to the escalation and the other adjustments will not cause any amounts received plr-127348-11 under the master lease to be treated as other than rents_from_real_property under sec_856 and sec_856 any and all of the cash and stock distributed by controlled to its shareholders as part of the purging distribution will be treated as a distribution_of_property with respect to its stock to which sec_301 and sec_305 apply and as a dividend for purposes of sec_301 and sec_857 to the extent of controlled’s current and accumulated_earnings_and_profits any and all of the cash and stock distributed by controlled to its shareholders as part of the purging distribution treated as a dividend will first reduce controlled’s earnings_and_profits accumulated in any non-reit_year pursuant to sec_857 the amount of any distribution of stock received by any shareholder of controlled as part of the purging distribution will be considered to equal the amount of the money which could have been received instead sec_1_305-1 caveats except as expressly provided herein no opinion is expressed or implied concerning the tax consequences of any aspect of any transaction or item discussed or referenced in this letter we express no opinion about the tax treatment of the proposed transaction under other provisions of the code and regulations or the tax treatment of any condition existing at the time of or effect resulting from the proposed transaction that is not specifically covered by the above rulings in particular we express no opinion regarding i whether either the internal distribution or the external distribution satisfies the business_purpose requirement of sec_1_355-2 ii whether either the internal distribution or the external distribution is being used principally as a device for the distribution of the earnings_and_profits of distributing or controlled or both see sec_355 and sec_1_355-2 iii whether either the internal distribution or the external distribution is part of a plan or series of related transactions under sec_355 iv whether controlled otherwise qualifies as a reit under part ii of subchapter_m of chapter of the code v whether the purging distribution constitutes a preferential_dividend under sec_562 and vi distributing has not represented that it has not been a usrphc at any time during the five-year period ending on the date of the external distribution or that plr-127348-11 no foreign_person will hold greater than five percent of the stock of distributing on the date of the external distribution therefore no opinion is expressed regarding the federal tax consequences to any greater than five percent foreign shareholder under sec_897 as a result of the external distribution except as expressly provided herein no opinion is expressed or implied concerning the tax consequences of any aspect of any transaction or item discussed or referenced in this letter this ruling is directed only to the taxpayer requesting it sec_6110 of the code provides that it may not be used or cited as precedent temporary or final regulations pertaining to one or more of the issues addressed in this ruling have not yet been adopted therefore this ruling will be modified or revoked by the adoption of temporary or final regulations to the extent the regulations are inconsistent with any conclusion in the letter_ruling see section dollar_figure of revproc_2010_1 2010_1_irb_1 however when the criteria in section dollar_figure of revproc_2010_1 2010_1_irb_1 are satisfied a ruling is not revoked or modified retroactively except in rare or unusual circumstances in accordance with the power_of_attorney on file with this office a copy of this letter is being sent to your authorized representative a copy of this letter must be attached to any income_tax return to which it is relevant alternatively taxpayers filing their returns electronically may satisfy this requirement by attaching a statement to their return that provides the date and control number of the letter_ruling sincerely richard k passales richard k passales senior counsel branch office of associate chief_counsel corporate


internal_revenue_service number release date index number ---------------------------------------------- --------------------------- ---------------------------------------------------- ----------- ------------------------------------------ department of the treasury washington dc person to contact --------------------------- id no -------------- telephone number ---------------------- refer reply to cc psi b03 - plr-107982-13 date date legend x ---------------------------------------------------- ----------------------------------------------------- y ---------------------------------------------------- -------------------------------------------------- z ---------------------------------------------------- ------------------------------------------------------------------------ country d1 -------- ------------------- dear ---------------- this letter responds to a letter dated date and subsequent correspondence submitted on behalf of x requesting a ruling under sec_301_9100-1 and sec_301_9100-3 of the procedure and administration regulations that x be granted an extension of time to file an election to be classified as a partnership under sec_301_7701-3 facts the information submitted states that x was formed on d1 as a limitada under the laws of country x’s default classification is an association_taxable_as_a_corporation because all members have limited_liability as of d1 x had more than one member including y z is the general_partner of y x intended to elect to be treated as a partnership for federal tax purposes effective d1 however a form_8832 entity plr-107982-13 classification election electing to be treated as a partnership effective d1 was not timely filed law and analysis sec_301_7701-3 provides that a business_entity that is not classified as a corporation under sec_301_7701-2 or an eligible_entity can elect its classification for federal tax purposes as provided in sec_301_7701-3 under sec_301_7701-3 an eligible_entity with at least two members can elect to be classified as either an association and thus a corporation under sec_301_7701-2 or a partnership sec_301_7701-3 provides that unless an entity elects otherwise a foreign eligible_entity is an association if all members have limited_liability sec_301_7701-3 provides that an eligible_entity may elect to be classified other than as provided in sec_301_7701-3 or to change its classification by filing a form_8832 with the service_center designated on the form_8832 sec_301_7701-3 provides that an election made under sec_301_7701-3 will be effective on the date specified by the entity on form_8832 or on the date filed if no date is specified on the election form the effective date specified on form_8832 cannot be more than days prior to the date on which the election is filed and cannot be more than months after the date on which the election is filed sec_301_9100-1 provides that the commissioner may grant a reasonable extension of time under the rules set forth in sec_301_9100-2 and sec_301_9100-3 to make a regulatory election or a statutory election but no more than six months except in the case of a taxpayer who is abroad under all subtitles of the code except subtitles e g h and i sec_301_9100-1 defines a regulatory election to include an election whose due_date is prescribed by a regulation published in the federal_register sec_301_9100-2 provides the rules governing automatic extensions of time for making certain elections sec_301_9100-3 provides extensions of time for regulatory elections that do not meet the requirements of sec_301_9100-2 under sec_301_9100-3 a request for relief will be granted when the taxpayer provides evidence including affidavits described in sec_301_9100-3 to establish to the satisfaction of the commissioner that the taxpayer acted reasonably and in good_faith and the grant of relief will not prejudice the interests of the government plr-107982-13 conclusion based on the facts submitted and the representations made we conclude that the requirements of sec_301_9100-1 and sec_301_9100-3 have been satisfied as a result x is granted an extension of time of days from the date of this letter to file form_8832 with the appropriate service_center and elect to be classified as a partnership for federal tax purposes effective d1 a copy of this letter should be attached to the form_8832 except as specifically set forth above no opinion is expressed or implied concerning the federal tax consequences of the transaction described above under any other provision of the code specifically no opinion is expressed or implied as to whether x is otherwise eligible to make the election this ruling is directed only to the taxpayer requesting it sec_6110 provides that it may not be used or cited as precedent in accordance with a power_of_attorney on file with this office we are sending a copy of this letter to x’s authorized representative sincerely associate chief_counsel passthroughs special industries by ___________________________________ james a quinn senior counsel branch office of associate chief_counsel passthroughs special industries enclosures copy of this letter copy for sec_6110 purposes