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 b03 plr-128261-04 date date ------------------------------- -------------------------------------------- --------------------------------------------- legend old parent ---------------------------------------------------------------------- ------------------------------------------------------------ sub ---------------------------------------------------------------------- ------------------------------------------------------------ sub -------------------------------------------------------------------------------------- ---------------------------------------------------------------------- ------------------------------------------------------------ ---- acquiring ---------------------------------- ---------------------------------------------------------------------- ------------------------------------------------------------ sub ---------------------------------- ---------------------------------------------------------------------- ------------------------------------------------------------ sub ---------------------------------- ---------------------------------------------------------------------- ------------------------------------------------------------ sub ----------------------------------- plr-128261-04 -------------------------------------- -------------------------------------- ---------------------------------------------------------------------- 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----------------------------------------------------------- shareholder -------------------------------------------------------------- ----------------------------------------------------------- state x state y ---------------------------------------------------------- ------------------------------------------------------- ---------------- ---------------- busine sec_1 -------------------------------------------------------------------------------- --------------------------------------------------------------------------------------------------------------------- ---- -------------------------------------------------------------------------------------------------------------- ---------------------------------------------------------------------------------------------------------------- ---------------------------------------------------------------------- busine sec_2 -------------------------------------------------------------------------------- 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---------------------------------------------------------------------------------------------------------------- --------------------------------------------------------------------------------------------------------------------- certain sub --------------------------------------------------------------------------------- --------------------------------------------------------------------------------------------------------------------- assets -------------------------------------------------------------------------------- --------------------------------------------------------------------------------------------------------------------- ---- ------------------------------------------------------------------------------------------------------- certain old ------------------------------------------------------------------------------------------------------------- --------------------------------------------------------------------------------- plr-128261-04 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--------------------------------------------------------------------------------------------------------------------- ------------------------------------------------------------- certain sub ------------------------------------------------------------------------------------------------------------ assets ----------------------------------------------------------------------------------------------------------------- -------------------------------------------------------------------------------------------------- other sub ------------------------------------------------------------------------------------------------------------ assets -------------------------------------------------------------------------------- ------------------------------------------------------------------------------------------------------------------- ----------------------------------------------------------------------------------------------------------------- certain property asset ------------------------------------------------------------------------------------------------------------------ date date date date date xx yy zz aa --------------------------- ----- --------------------------------------------------------------------------------- --------------------------------------------------------- ------------------ --------- ------- ------- -------- ------- ----- plr-128261-04 -- ---- ----- ----- ----- ----- ----- -------- -------- -------- --------- bb cc aaa bbb ccc mmm nnn ooo r s t dear -------------- of revproc_2003_48 c b requesting rulings concerning the federal_income_tax consequences of a proposed transaction additional information was submitted in letters dated may august august september october november and date and january february february april and date the material information submitted for consideration is summarized below busine sec_3 either directly or through its subsidiaries old parent owns all the stock of sub sub acquiring sub and sub sub owns all the stock of sub and sub sub owns all the stock of sub and sub sub sub sub sub and sub are all incorporated in state x acquiring sub sub and sub either are or will be incorporated in state y all the above-indicated corporations use or will use an accrual_method of accounting common_stock and zz shares of preferred_stock outstanding the preferred_stock is non-voting with a par_value of dollar_figures is entitled to a non-cumulative annual dividend of r percent and is callable at the option of old parent at dollar_figures per share old parent has represented that the zz shares of preferred_stock outstanding is nonqualified_preferred_stock as defined in sec_351 of the internal_revenue_code but for this callable feature the old parent preferred_stock does not have any of the proscribed terms we respond to your letter dated date a date prior to the effective date old parent a state y corporation is engaged in busine sec_1 busine sec_2 and old parent has xx shares of class a common_stock yy shares of class b plr-128261-04 financial information has been received which indicates that busine sec_1 old parent established a capital_construction_fund ccf under section of specified in sec_351 a i ii iii or iv of the code shareholder shareholder and shareholder each own aa shares and shareholder owns aaa shares of old parent’s class a common_stock shareholder shareholder and shareholder each own bb shares and shareholder owns bbb shares of old parent’s class b common_stock shareholder shareholder and shareholder each own cc shares and shareholder owns ccc shares of old parent’s preferred_stock shareholder shareholder shareholder shareholder shareholder shareholder shareholder shareholder and shareholder together compose the family n shareholders and shareholder and shareholder together compose the family h shareholders the merchant marine act of as amended the act on date and owns qualified ccf vessels sub established a ccf under the act on date and owns qualified ccf vessels sub established a ccf under the act on date and owns qualified ccf vessels old parent sub and sub each have maintained their respective ccfs pursuant to agreements with the secretary of commerce acting through the national marine fisheries service nmfs conducted through sub and sub busine sec_2 conducted through acquiring and sub and busine sec_3 conducted through sub and sub each have had gross_receipts and operating_expenses representative of the active_conduct_of_a_trade_or_business for each of the past five years and the family h shareholders who have been involved in a long-standing acrimonious and irreconcilable dispute over the management and operation of the businesses of parent and its subsidiaries following a review of the history of old parent’s businesses and the effect the dispute between the family n shareholders and the family h shareholders was having on the management of those businesses both a new law firm and a new accounting firm hired by old parent to represent its interests separately from those of its shareholders recommended that the dispute be resolved by the families parting ways and dividing the three businesses of old parent and its subsidiaries among them with each family taking half of each respective business family n shareholders shareholder shareholder and shareholder shareholder shareholder and shareholder and shareholder shareholder and shareholder over protracted litigation and the resultant distrust amongst themselves have adversely affected their ability to manage and operate their portion of busine sec_2 of old parent the family n shareholders all live in state y and all of them are involved in the daily operations and management of their respective portion of busine sec_2 which is currently being conducted through sub as if each separate shareholder group’s interest one-third were being operated as a separate division of sub this is having an adverse affect on the day to day operations of sub and is only a temporary measure pending consummation of the proposed transaction described below old parent is owned and managed by two families the family n shareholders moreover significant disputes between three separate groups comprising the plr-128261-04 on the other hand the family n shareholders are not having disputes over busine sec_1 and busine sec_3 both of which are located in another state state x all key managerial decisions and daily activity for the family n shareholders’ respective interest in busine sec_1 and busine sec_3 are made solely by key employees none of whom are related to any of the family n shareholders the family n shareholders have represented that they intend to continue to directly engage in the management and operations of their respective share of busine sec_2 in state y but not busine sec_1 and busine sec_3 both in state x the family n shareholders have further represented that in the event either of the key employees for busine sec_1 or busine sec_3 currently run through sub and sub respectively cease to perform their duties sub and sub will hire another key_employee who is unrelated to any of the family n shareholders to handle all managerial duties of the business proposed and partially consummated accordingly to address these issues the following transaction has been i ii iii iv v on date old parent transferred its busine sec_2 assets to acquiring and sub in exchange for stock in acquiring and sub respectively the taxpayer has represented that each exchange constituted a tax-free_exchange under sec_351 of the code on date old parent transferred a qualified ccf vessel to sub in constructive exchange for additional sub stock old parent and sub have made an application to the commissioner of internal revenue ‘commissioner to enter into closing_agreement with respect to the vessel transfer the taxpayer has represented that this transaction constituted a tax-free_exchange under sec_351 sub will transfer certain sub assets to sub including an interest in a qualified ccf vessel in constructive exchange for additional stock of sub the first contribution sub will not assume any liabilities nor will it receive certain sub assets subject_to any liabilities sub and sub have made an application to the commissioner to enter into closing_agreement with respect to the transfer of the interest in the vessel sub will distribute all the stock of sub to old parent the first distribution sub will transfer one qualified ccf vessel the first vessel and its license to sub in exchange for three qualified ccf vessels the second vessels and their licenses in a transaction which the taxpayer has represented will qualify for nonrecognition treatment under sec_1031 sub and sub have made an application to the commissioner to enter into closing_agreement with respect to the vessel exchange vi sub will distribute to old parent certain property used in state x old parent will transfer certain property to sub in constructive exchange for plr-128261-04 additional sub stock the taxpayer has represented that old parent’s transfer of certain property to sub will constitute a tax-free_exchange under sec_351 vii old parent will contribute certain old parent assets subject_to liabilities relating to busine sec_2 including part of its ccf an undivided percent interest in asset and a qualified ccf vessel to sub the second contribution immediately prior this transfer sub will enter into an agreement with the secretary of commerce acting through nmfs to establish a ccf old parent and sub have made an application to the commissioner to enter into closing_agreement with respect to the vessel transfer and closing_agreement with respect to the ccf transfer viii old parent will contribute other old parent assets subject_to liabilities relating to busine sec_2 including part of its ccf an undivided percent interest in asset and four qualified ccf vessels and the stock of sub to acquiring in constructive exchange for additional acquiring stock the taxpayer has represented that this exchange will constitute a tax-free_exchange under sec_351 immediately prior this step acquiring will enter into an agreement with the secretary of commerce acting through nmfs to establish a ccf old parent and acquiring have made an application to the commissioner to enter into closing_agreement with respect to the vessel transfers and closing_agreement with respect to the ccf transfer ix x xi sub will contribute certain sub assets subject_to liabilities relating to busine sec_2 including part of the capital construction funds that it received in the second contribution step vii above and one qualified ccf vessel to sub in exchange for t shares of sub common_stock the third contribution immediately prior this step sub will enter into an agreement with the secretary of commerce acting through nmfs to establish a ccf sub and sub have made an application to the commissioner to enter into closing_agreement with respect to the vessel transfer and closing_agreement with respect to the ccf transfer sub will distribute all the outstanding shares of sub to old parent the second distribution sub will contribute other sub assets subject_to liabilities relating to busine sec_2 including part of the capital construction funds that it received in the second contribution step vii above to sub in exchange for t shares of its common_stock the fourth contribution immediately prior this step sub will enter into an agreement with the secretary of commerce acting through nmfs to establish a ccf sub and sub have made an application to the commissioner to enter into closing_agreement with respect to the ccf transfer plr-128261-04 xii sub will distribute all the outstanding shares of sub to old parent the third distribution xiii old parent will transfer one-third of the interest in two separate qualified ccf vessels one-third of sub 4’s common_stock and one-third of sub 1’s class a and class b common_stock to each of sub sub and sub in constructive exchange for additional shares in each respective corporation the taxpayer has represented that these three exchanges will constitute tax-free exchanges under sec_351 old parent sub sub and sub have made an application to the commissioner to enter into closing_agreement with respect to the vessel transfers xiv sub sub and sub will transfer its respective interests in the two qualified vessels transferred in step xiii above and its respective interest in the sub stock transferred in step xiii above to sub in constructive exchange for additional shares of sub 1’s stock the taxpayer has represented that each exchange will constitute a tax-free_exchange under sec_351 sub sub sub and sub have made an application to the commissioner to enter into closing_agreement with respect to the vessel transfers xv sub sub and sub each will amend its certificate of incorporation so that it will have three classes of stock class a common_stock class b common_stock and preferred_stock that mirror the capital structure of old parent except that the preferred_stock of each of sub sub and sub shall provide that the issuing_corporation may not exercise its right to redeem or purchase such stock within the year period beginning on the date such stock is issued after the amendments old parent will exchange all of its shares of sub common_stock for mmm shares of new sub class a common_stock nnn shares of new sub class b common_stock and ooo shares of new sub preferred_stock all of its shares of sub common_stock for mmm shares of new sub class a common_stock nnn shares of new sub class b common_stock and ooo shares of new sub preferred_stock and all of its shares of sub common_stock for mmm shares of new sub class a common_stock nnn shares of new sub class b common_stock and ooo shares of new sub preferred_stock together the exchanges it has been represented that the exchanges will each qualify under sec_368 xvi old parent will distribute mmm shares of sub 3’s new class a common_stock to shareholder in exchange for shareholder 4’s aa shares of old parent class a common_stock nnn shares of sub 3’s new class b common_stock to shareholder in exchange for shareholder 5’s bb shares of old parent class b common_stock and ooo shares of sub 3’s new preferred_stock to shareholder in exchange for shareholder 6’s cc shares of old parent preferred_stock the fourth distribution plr-128261-04 xvii old parent will distribute mmm shares of sub 7’s new class a common_stock to shareholder in exchange for shareholder 1’s aa shares of old parent class a common_stock nnn shares of sub 7’s new class b common_stock to shareholder in exchange for shareholder 2’s bb shares of old parent class b common_stock and ooo shares of sub 7’s new preferred_stock to shareholder in exchange for shareholder 3’s cc shares of old parent’s preferred_stock the fifth distribution xviii old parent will distribute mmm shares of sub 8’s new class a common_stock to shareholder in exchange for shareholder 7’s aa shares of old parent class a common_stock nnn shares of sub 8’s new class b common_stock to shareholder in exchange for shareholder 8’s bb shares of old parent class b common_stock and ooo shares of sub 8’s new preferred_stock to shareholder in exchange for shareholder 9’s cc shares of old parent’s preferred_stock the sixth distribution following this step the split up between the family n shareholders and the family h shareholders will be complete the family n shareholders will have exchanged all their stock in old parent for stock in sub sub and sub and the family h shareholders will hold all the outstanding_stock in old parent xix acquiring will amend its certificate of incorporation so that it will have three classes of stock class a common_stock class b common_stock and preferred_stock that mirror the capital structure of old parent except that the preferred_stock of acquiring shall provide that the issuing_corporation may not exercise its right to redeem or purchase such stock within the year period beginning on the date such stock is issued after these amendments old parent will exchange all of its shares of old acquiring common_stock for aaa shares of new acquiring class a common_stock bbb shares of new acquiring class b common_stock and ccc shares of new acquiring preferred_stock the acquiring exchange it has been represented that the acquiring exchange will qualify under sec_368 xx old parent will merge with and into acquiring with acquiring as the surviving corporation the merger pursuant to the merger acquiring will acquire all of old parent’s remaining assets including all the stock of sub and assume all of old parent’s liabilities as a result of the merger shareholder will exchange aaa shares of old parent class a common_stock and ccc shares of old parent preferred_stock for aaa shares of new acquiring class a common_stock and ccc shares of new acquiring preferred_stock and shareholder will exchange bbb shares of old parent class b common_stock for bbb shares of new acquiring class b common_stock it has been represented that the merger of old parent with and into acquiring will qualify as a reorganization under sec_368 plr-128261-04 also in connection with the forgoing transactions the family h shareholders and the family n shareholders have entered into a number of agreements providing for the separation of the companies and governing various relationships between them acquiring and sub have entered into agreements a governing the indemnification of one party to the other for certain liabilities the indemnification obligations b providing to jointly defend and equally fund claims arising out of the ordinary course of business or from known or foreseeable business risks of old parent or its subsidiaries from conduct or activities occurring prior to the date the reorganization agreement was signed the defense obligations collectively the separation agreements and c representing they each will operate their undivided_interest in asset independently of each other and with their own and separate employees in their respective business before the proposed transactions sub sub and sub will have entered into an agreement a providing each will be jointly and severally liable to acquiring for sub 3’s share of the separation agreements and b providing for adjustment payments to be made after the proposed transaction if as of the date the proposed transaction takes place certain financial measurements regarding asset for the three companies differ from previously agreed upon amounts the family n true-up agreement following the proposed transaction shareholder shareholder and shareholder will own all of the outstanding_stock of sub shareholder shareholder and shareholder will own all the outstanding_stock of sub and shareholder shareholder and shareholder will own all the outstanding_stock of sub sub sub and sub will each own one-third of each class of the outstanding shares of sub which will own all the outstanding_stock of sub and sub shareholder and shareholder will own all the outstanding_stock of acquiring which will own all the outstanding_stock of sub and sub sub and sub will be engaged in busine sec_1 acquiring sub sub and sub will be engaged in busine sec_2 and sub and sub will be engaged in busine sec_3 the first distribution the taxpayers have made the following representations in connection with the first contribution step iii above and the first distribution step iv above a no part of the consideration to be distributed by sub will be received by a shareholder as a creditor employee or in any capacity other than that of a shareholder of the corporation b the five years of financial information submitted on behalf of sub and sub represents the corporations’ present operations there have been no substantial operational changes since the date of the last financial statements submitted plr-128261-04 c d e f g h i j k l following the first distribution sub and sub will each continue the active_conduct of its respective business independently and with its separate employees the first distribution is being carried out for the purpose of facilitating the division of the two shareholder groups the family n shareholders and the family h shareholders thereby eliminating the negative impact on old parent’s businesses that has resulted from the disputes including litigation between them the first distribution is motivated in whole or substantial part by this corporate business_purpose there is no plan or intention by sub or sub to make an election pursuant to sec_1361 to be treated as a s_corporation except as described in the step xiii and step xiv above and in the merger step xx above there is no plan or intention by the shareholders of sub to sell exchange transfer by gift or otherwise dispose_of any of their stock of either sub or sub after the proposed transaction there is no plan or intention by either sub or sub directly or through any subsidiary_corporation to purchase any of its outstanding_stock after the transaction other than through stock purchases meeting the requirements of sec_4 b of revproc_96_30 there is no plan or intention to liquidate either sub or sub to merge either corporation with any other corporation or to sell or otherwise dispose_of the assets of either corporation after the transaction except in the ordinary course of business no intercorporate debt will exist between sub and sub at the time of or subsequent to the first distribution payments made in connection with all continuing transactions between sub and its subsidiary and sub will 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 the first distribution is not part of a plan or series of related transactions within the meaning of sec_355 pursuant to which one or more persons will acquire directly or indirectly stock possessing percent or more of the total combined voting power of all classes of stock of either sub or sub or stock possessing percent or more of the total value of all classes of stock of sub or sub plr-128261-04 m sub and sub represent that the interest of either corporation or both in the qualified ccf vessel described in closing_agreement will be sold or otherwise_disposed_of as soon as practicable after the completion of the proposed transaction and in no event later than months after the date of the issuance of this letter based solely on the information submitted and the representations set forth above we hold as follows regarding the first contribution and first distribution as described in step iii and step iv above the first contribution followed by the first distribution will constitute a reorganization within the meaning of sec_368 sub and sub each will be a party to the reorganization within the meaning of sec_368 sub will recognize no gain_or_loss upon the first contribution sec_361 sub will recognize no gain_or_loss upon the first contribution sec_1032 sub 6’s basis for each asset received in the first contribution will equal the basis of that asset in the hands of sub immediately prior to the transfer sec_362 sub 6’s holding_period for each asset received in the first contribution will include the period during which sub held such asset sec_1223 sub will recognize no gain_or_loss on the first distribution sec_361 old parent will recognize no gain_or_loss and no amount will be included in its income upon the first distribution sec_355 the holding_period of the sub stock received by old parent in the first distribution will include the holding_period of the sub stock with respect to which the first distribution will be made provided old parent held the sub stock as a capital_asset on the date of the first distribution sec_1223 earnings_and_profits will be allocated between sub and sub in accordance with sec_1_312-10 if the transfer of the interest of the qualified_vessel by sub to sub in step iii above qualifies under sec_351 or sec_361 and closing_agreement is properly entered into then closing_agreement shall determine the ccf tax consequences resulting from the transfer the second distribution and third distribution plr-128261-04 the taxpayers have made the following representations in connection with the third contribution step ix and second distribution step x and the fourth contribution step xi and third distribution step xii aa the indebtedness owed by sub and sub to sub if any after the second distribution and the third distribution will not constitute stock_or_securities bb no part of the consideration to be distributed by sub will be received by a shareholder as a creditor employee or in any capacity other than that of a shareholder of the corporation cc the five years of financial information submitted on behalf of sub represents the corporation’s present operations there have been no substantial operational changes since the date of the last financial statements submitted dd following the second distribution and the third distribution sub sub and sub will each continue independently and with its separate employees the active_conduct of its share of all the integrated activities of the business conducted by sub prior to the consummation of the transaction ee the second distribution and the third distribution are being carried out for the purposes of facilitating the division of the two shareholder groups the family n shareholders and the family h shareholders thereby eliminating the negative impact on old parent’s businesses that has resulted from the disputes including litigation between them and facilitating the division of the three family n shareholder groups shareholder shareholder and shareholder shareholder shareholder and shareholder and shareholder shareholder and shareholder thereby eliminating the negative impact on old parent’s businesses that has resulted from the disputes including litigation between them the second distribution and the third distribution are motivated in whole or substantial part by this corporate business_purpose ff there is no plan or intention by sub sub or sub to make an election pursuant to sec_1361 to be treated as a s_corporation gg except as described in the exchanges step xv above and the fourth distribution step xvi above the fifth distribution step xvii above and the sixth distribution step xviii above there is no plan or intention by the shareholders of sub to sell exchange transfer by gift or otherwise dispose_of any of their stock of either sub sub or sub after the second distribution and the third distribution hh there is no plan or intention by sub sub or sub directly or through any subsidiary_corporation to purchase any of its outstanding_stock after plr-128261-04 the transaction other than through stock purchases meeting the requirements of sec_4 b of revproc_96_30 ii jj there is no plan or intention to liquidate sub sub or sub to merge any corporation with any other corporation or to sell or otherwise dispose_of the assets of either corporation after the transaction except in the ordinary course of business the total adjusted_basis and the fair_market_value of the assets transferred by sub to each of sub and sub each equals or exceeds the sum of the liabilities assumed if any by sub and sub respectively plus any liabilities to which the transferred assets are subject kk the liabilities assumed in the transaction and the liabilities to which the transferred assets are subject were incurred in the ordinary course of business and are associated with the assts being transferred ll except for obligations under the family n true-up agreement or to old parent under the separation agreements no intercorporate debt will exist between sub sub or sub at the time of or subsequent to the second distribution and the third distribution mm payments made in connection with all continuing transactions if any between sub and sub or sub will be for fair_market_value based on terms and conditions arrived at by the parties bargaining at arm’s length nn sub sub and sub are not investment companies as defined in sec_368 and iv oo the second distribution and the third distribution are not part of a plan or series of related transactions within the meaning of sec_355 pursuant to which one or more persons will acquire directly or indirectly stock possessing percent or more of the total combined voting power of all classes of stock of either sub sub or sub or stock possessing percent or more of the total value of all classes of stock of sub sub or sub based solely on the information submitted and the representations as set forth above we hold as follows regarding the third contribution and the second distribution and the fourth contribution and the third distribution described in step ix step x step xi and step xii above the third contribution followed by the second distribution will constitute a reorganization within the meaning of sec_368 sub and sub each will be a party to the reorganization within the meaning of sec_368 plr-128261-04 the fourth contribution followed by the third distribution will constitute a reorganization within the meaning of sec_368 sub and sub each will be a party to the reorganization within the meaning of sec_368 sub will recognize no gain_or_loss upon either the third contribution or the fourth contribution sec_361 and sec_357 sub and sub will recognize no gain_or_loss upon the third contribution and the fourth contribution respectively sec_1032 sub 7’s basis for each asset received in the third contribution and sub 8’s basis for each asset received in fourth contribution respectively will equal the basis of that asset in the hands of sub immediately prior to the transfer sec_362 sub 7’s holding_period for each asset received in the third contribution and sub 8’s holding_period for each asset received in the fourth contribution respectively will include the period during which sub held such asset sec_1223 sub will recognize no gain_or_loss on the second distribution or the third distribution sec_361 old parent will recognize no gain_or_loss and no amount will be included in its income upon the second distribution and the third distribution sec_355 the holding_period of the sub stock and sub stock received by old parent in the second distribution and the third distribution respectively will include the holding_period of the sub stock with respect to which the second distribution and the third distribution respectively are made provided old parent held the sub stock as a capital_asset on the date of the second distribution and the third distribution sec_1223 earnings_and_profits will be allocated between sub and sub and sub and sub in accordance with sec_1_312-10 if the transfer of the qualified_vessel in the third contribution step ix above qualifies under sec_351 or sec_361 and closing_agreement is properly entered into then closing_agreement shall determine the ccf tax consequences resulting from the transfer if the transfer of the ccf in the third contribution step ix above qualifies under sec_351 and the transfer to and maintenance of the ccf by sub is approved by the secretary of commerce and closing_agreement is properly entered into then closing_agreement shall determine the ccf tax consequences resulting from the transfer plr-128261-04 if the transfer of the ccf in the fourth contribution step xi above qualifies under sec_351 and the transfer to and maintenance of the ccf by sub is approved by the secretary of commerce and closing_agreement is properly entered into then closing_agreement shall determine the ccf tax consequences resulting from the transfer payments made between any of sub sub or sub under the family n true-up agreement that i have arisen or will arise for a taxable_period ending on or before the second distribution and the third distribution or for a taxable_period beginning before and ending after the second distribution and the third distribution and ii will not become fixed and ascertainable until after the second distribution and the third distribution will be treated as occurring immediately before the second distribution and the third distribution cf 344_us_6 tax character of later transaction will derive from earlier related transaction the exchanges the taxpayer has made the following representation in connection with the exchanges step xv above aaa as of the date of the issuance of preferred_stock by sub sub and sub in step xv above the issuing_corporation and its shareholders have not and will not have entered into any agreement that grants the issuing corporation’s shareholders the right to require the issuing_corporation or a related_person as described in sec_267 to redeem or purchase the preferred_stock or requires the issuing_corporation or a related_person as described in sec_267 to redeem or repurchase the preferred_stock or gives the issuing_corporation or a related_person as described in sec_267 the right to redeem or repurchase the preferred_stock before twenty years and one day following the issuance of the preferred_stock except in the case of a shareholder's death disability or mental incompetency based solely on the information submitted and the representations as set forth above we hold as follows regarding the exchanges described in step xv above the shares of new preferred_stock of sub sub and sub received by old parent in the exchanges will not constitute nonqualified_preferred_stock within the meaning of sec_351 the fourth distribution fifth distribution and sixth distribution the taxpayer has made the following representations in connection with the second contribution step vii above and fourth distribution step xvi above the fifth distribution step xvii above and the sixth distribution step xviii above plr-128261-04 aaaa the indebtedness owed by sub sub or sub to each other or to old parent after their respective distributions will not constitute stock_or_securities bbbb the fair_market_value of the sub stock received by each of shareholder shareholder and shareholder will be approximately equal to the fair_market_value of the old parent stock surrendered by each of the shareholders in the exchange the sub stock received by each of shareholder shareholder and shareholder will be approximately equal to the fair_market_value of the old parent stock surrendered by each of the shareholders in the exchange the sub stock received by each of shareholder shareholder and shareholder will be approximately equal to the fair_market_value of the old parent stock surrendered by each of the shareholders in the exchange cccc no part of the consideration to be distributed by old parent will be received by a shareholder as a creditor employee or in any capacity other than that of a shareholder of the corporation dddd the five years of financial information submitted on behalf of old parent and sub represents the corporations’ present operations there have been no substantial operational changes since the date of the last financial statements submitted eeee immediately after the fourth distribution fifth distribution and sixth distribution at least percent of the fair_market_value of the gross assets of old parent will consist of the stock and securities of controlled corporations that are engaged in the active_conduct_of_a_trade_or_business as defined in sec_355 ffff following the fourth distribution fifth distribution and sixth distribution old parent through its subsidiaries sub sub and sub each will continue the active_conduct of its business independently and with its separate employees gggg the fourth distribution fifth distribution and sixth distribution are being carried out for the purposes of facilitating the division of the two shareholder groups the family n shareholders and the family h shareholders thereby eliminating the negative impact on old parent’s businesses that has resulted from the disputes including litigation between them and facilitating the division of the three family n shareholder groups shareholder shareholder and shareholder shareholder shareholder and shareholder and shareholder shareholder and shareholder thereby eliminating the negative impact on old parent’s businesses that has resulted from the disputes including litigation between them the fourth distribution fifth plr-128261-04 distribution and sixth distribution are motivated in whole or substantial part by this corporate business_purpose hhhh there is no plan or intention by old parent or acquiring sub sub or sub to make an election pursuant to sec_1361 to be treated as a s_corporation iiii except as described in the merger step xx above there is no plan or intention by the shareholders of old parent or acquiring to sell exchange transfer by gift or otherwise dispose_of any of their stock of either old parent or acquiring sub sub or sub after the transaction jjjj there is no plan or intention by either old parent or acquiring or sub sub or sub directly or through any subsidiary_corporation to purchase any of its outstanding_stock after the transaction other than through stock purchases meeting the requirements of sec_4 b of revproc_96_30 kkkk except as described in the merger step xx above there is no plan or intention to liquidate either old parent or acquiring or sub sub or sub to merge either corporation including acquiring with any other corporation or to sell or otherwise dispose_of the assets of either corporation after the transaction except in the ordinary course of business llll the total adjusted_basis and the fair_market_value of the assets transferred to sub by old parent each equals or exceeds the sum of the liabilities assumed by sub plus any liabilities to which the transferred assets are subject mmmm the liabilities assumed in the transaction and the liabilities to which the transferred assets are subject were incurred in the ordinary course of business and are associated with the assets being transferred nnnn no intercorporate debt will exist between old parent or acquiring and sub sub or sub at the time of or subsequent to the fourth distribution fifth distribution and sixth distribution except under the separation agreements or the family n true-up agreement oooo payments made in connection with all continuing transactions if any between old parent or any of its subsidiaries or acquiring or any of old parent’s former subsidiaries and sub or any of its subsidiaries sub or any of its subsidiaries or sub or any of its subsidiaries will be for fair_market_value based on terms and conditions arrived at by the parties bargaining at arm’s length pppp no parties to the transaction are investment companies as defined in sec_368 and iv plr-128261-04 qqqq the fourth distribution fifth distribution and sixth distribution are not part of a plan or series of related transactions within the meaning of sec_355 pursuant to which one or more persons will acquire directly or indirectly stock possessing percent or more of the total combined voting power of all classes of stock of either old parent or sub sub or sub or stock possessing percent or more of the total value of all classes of stock of old parent or sub sub or sub based solely on the information submitted and the representations as set forth above we hold as follows regarding the second contribution and the fourth distribution step vii and step xvi above the fifth distribution step xvii above and the sixth distribution step xviii above the second contribution followed by the fourth distribution will constitute a reorganization within the meaning of sec_368 old parent and sub each will be a party to the reorganization within the meaning of sec_368 old parent will recognize no gain_or_loss upon the second contribution sec_361 and sec_357 sub will recognize no gain_or_loss upon the second contribution sec_1032 sub 3’s basis for each asset received in the second contribution will equal the basis of that asset in the hands of old parent immediately prior to the transfer sec_362 sub 3’s holding_period for each asset received in the second contribution will include the period during which old parent held such asset sec_1223 old parent will recognize no gain_or_loss and no amount will be included in its income upon the fourth distribution sec_361 old parent will recognize no gain_or_loss and no amount will be included in its income upon the fifth distribution and the sixth distribution sec_355 shareholder shareholder and shareholder will recognize no gain_or_loss and no amount will be included in their income upon the fourth distribution shareholder shareholder and shareholder will recognize no gain_or_loss and no amount will be included in their income upon the fifth distribution and shareholder shareholder and shareholder will recognize no gain_or_loss and no amount will be included in their income upon the sixth distribution sec_355 plr-128261-04 the aggregate basis of the sub stock received by each of shareholder shareholder and shareholder in the fourth distribution will equal the aggregate adjusted_basis of the old parent stock surrendered by each of the shareholders respectively in exchange therefor sec_358 the aggregate basis of the sub stock received by each of shareholder shareholder and shareholder in the fifth distribution will equal the aggregate adjusted_basis of the old parent stock surrendered by each of the shareholders respectively in exchange therefor sec_358 the aggregate basis of the sub stock received by each of shareholder shareholder and shareholder in the sixth distribution will equal the aggregate adjusted_basis of the old parent stock surrendered by each of the shareholders respectively in exchange therefor sec_358 the holding_period of the sub stock received by shareholder shareholder and shareholder in the fourth distribution will include the holding_period of the old parent stock surrendered in exchange therefor provided the old parent stock is held as a capital_asset on the date of the distribution sec_1223 the holding_period of the sub stock received by shareholder shareholder and shareholder in the fifth distribution will include the holding_period of the old parent stock surrendered in exchange therefor provided the old parent stock is held as a capital_asset on the date of the distribution sec_1223 the holding_period of the sub stock received by shareholder shareholder and shareholder in the sixth distribution will include the holding_period of the old parent stock surrendered in exchange therefor provided the old parent stock is held as a capital_asset on the date of the distribution sec_1223 earnings_and_profits will be allocated between old parent and sub in accordance with ' a earnings_and_profits will be allocated between old parent and sub and old parent and sub in accordance with ' b if the transfer of the qualified_vessel in the second contribution step vii above qualifies under sec_351 or sec_361 and closing_agreement is properly entered into then closing_agreement shall determine the tax consequences resulting from the transfer if the transfer of the ccf in the second contribution step vii above qualifies under sec_351 and the transfer to and maintenance of the fund by sub is approved by the secretary of commerce and closing_agreement is properly entered into then closing_agreement shall determine the tax consequences resulting from the transfer payments made between any of acquiring sub sub or sub under the separation agreements that i have arisen or will arise for a taxable_period ending on or before the fourth distribution fifth distribution and plr-128261-04 sixth distribution or for a taxable_period beginning before and ending after the fourth distribution fifth distribution and sixth distribution and ii will not become fixed and ascertainable until after the fourth distribution fifth distribution and sixth distribution will be treated as occurring immediately before the fourth distribution fifth distribution and sixth distribution cf 344_us_6 tax character of later transaction will derive from earlier related transaction the fifth distribution step xvii above and the sixth distribution step xviii above will not adversely affect rulings issued regarding the second distribution and the third distribution rulings through the acquiring exchange the taxpayer has made the following representation in connection with the acquiring exchange step xix above aaaaa as of the date of the issuance of preferred_stock by acquiring in step xix above the issuing_corporation and its shareholders have not and will not have entered into any agreement that grants the issuing corporation’s shareholders the right to require the issuing_corporation or a related_person as described in sec_267 to redeem or purchase the preferred_stock or requires the issuing_corporation or a related_person as described in sec_267 to redeem or repurchase the preferred_stock or gives the issuing_corporation or a related_person as described in sec_267 the right to redeem or repurchase the preferred_stock before twenty years and one day following the issuance of the preferred_stock except in the case of a shareholder's death disability or mental incompetency based solely on the information submitted and the representations as set forth above we hold as follows regarding the acquiring exchange described in step xix above the shares of new preferred_stock issued by acquiring and received by old parent in the acquiring exchange will not constitute nonqualified_preferred_stock within the meaning of sec_351 miscellaneous rulings based solely on the information submitted and the representations as set forth above we hold as follows if the transfer of the qualified_vessel by old parent to sub in step ii above qualifies under sec_351 and closing_agreement is properly entered into then closing_agreement shall determine the ccf tax consequences resulting from the transfer plr-128261-04 if the transfer by sub of the first vessel to sub in exchange for the second vessels step v above qualifies for tax-free treatment pursuant to sec_1031 and closing_agreement is properly entered into then closing_agreement shall determine the ccf tax consequences resulting from the transfer gain will be recognized by sub on it’s distribution of certain property to old parent step vi above to the extent that the fair_market_value of certain property exceeds sub 4’s adjusted_basis in certain property sec_311 old parent will treat the receipt of certain property step vi above as a dividend to the extent of the current_earnings_and_profits and accumulated_earnings_and_profits of sub to the extent that the fair_market_value of certain property exceeds sub 4’s current_earnings_and_profits and accumulated_earnings_and_profits the excess will be treated by old parent as a reduction to old parent’s adjusted_basis in its sub stock to the extent that the fair_market_value of the certain property exceeds sub 4’s current_earnings_and_profits and accumulated_earnings_and_profits and exceeds old parent’s adjusted_basis in its sub stock the excess will be treated by old parent as gain from the sale_or_exchange of property sec_301 c and c and sec_316 if the transfer of the qualified vessels by old parent to acquiring in step viii above qualifies under sec_351 or sec_361 and closing_agreement is properly entered into then closing_agreement shall determine the ccf tax consequences resulting from the transfer if the transfer of the ccf by old parent to acquiring in step viii above qualifies under sec_351 and the transfer to and maintenance of the fund by acquiring is approved by the secretary of commerce and closing_agreement is properly entered into then closing_agreement shall determine the ccf tax consequences resulting from the transfer if the transfer of the qualified_vessel in step xiii above qualifies under sec_351 or sec_361 and closing_agreement is properly entered into then closing_agreement shall determine the tax consequences resulting from the transfer if the transfer of the qualified_vessel in step xiv above qualifies under sec_351 and closing_agreement is properly entered into then closing_agreement shall determine the tax consequences resulting from the transfer assuming that step i step ii step vi step viii step xiii and step xiv each qualify as a sec_351 transaction step xv and step xix each qualify as a reorganization under sec_368 and the plr-128261-04 merger step xx above qualifies as a reorganization under sec_368 the merger will not adversely affect any of the rulings issued herein except as expressly provided herein no opinion is expressed or implied closing_agreement through closing_agreement together the closing concerning the tax consequences of any aspect of any transaction or item discussed or referenced in this letter specifically no opinion is expressed regarding whether the requirements of sec_351 have been satisfied in step i step ii step vi step viii step xiii or step xiv whether the requirements of sec_1031 have been satisfied in step v whether the transaction described in step xv and step xix qualify as a reorganization under sec_368 or whether the merger described in step xx qualifies as a reorganization under sec_368 or any_tax consequences as a result of these transactions agreements are enclosed the closing agreements may not be cited or relied upon by any person or entity whatsoever as precedent in the disposition of any other case the closing agreements may be reopened in the event of fraud malfeasance or misrepresentation of material fact it is subject_to internal_revenue_code sections that expressly provide that effect be given to their provisions including any stated exception for code sec_7122 notwithstanding any other law or rule_of law and if it relates to a tax period ending after the effective date of the closing agreements it is subject_to any law enacted after the effective date of this closing_agreement that applies to that tax period closing agreements should be signed and dated by each authorized representative of each corporation please return the originals and all copies to this office within days of the date of this letter if the signed original and copies of the closing agreements are not received by this office within days we will assume you no longer desire to enter into the closing_agreement and we will close our files in regard to this matter mutual execution of the closing agreements if either the taxpayer or the commissioner fails to execute the closing agreements such determinations and holdings will be null and void for federal_income_tax purposes the code provides that it may not be used or cited as precedent letter is being sent to your authorized representative relevant this ruling is directed only to the taxpayer requesting it sec_6110 of in accordance with the power_of_attorney on file with this office a copy of this all determinations and holdings contained in this letter are contingent on the a copy of this letter must be attached to any income_tax return to which it is the original duplicate triplicate and quadruplicate copies of the enclosed plr-128261-04 the rulings contained in this letter are based upon information and representations submitted by the taxpayer and accompanied by a penalty of perjury statement executed by an appropriate party while this office has not verified any of the material submitted in support of the request for rulings it is subject_to verification on examination sincerely richard e coss senior counsel branch associate chief_counsel corporate cc --------------------------------------------------------- ------------------------------------------------------------------------ ------------------------------------------------------ --------------------------------------------------------------- ---------------------------------- ------------------------------------------------------------------------ ------------------------------------------------------ --------------------- -------------------------------- ---------------------- -------------------------------------------------------------------- ------------------ ------------------------------ ---------------------- ------------------------------------------------------------------- -------------------------- -------------------------- plr-128261-04 closing_agreement -- step ii vessel transfer closing_agreement on final_determination covering specific matters this closing_agreement is made in quadruplicate under and in pursuance of sec_7121 of the internal_revenue_code_of_1986 as amended by and between a ------------------------------------------------------------- ------------------------------------------------------------------------------------------------------------------------------- ------------------------------------------------------------------------------------------------------- hereinafter the transferor and b ---------------------------------------------------------------------------------------------------------- ---------------------------------------------------------------------whose taxpayer_identification_number is --------------- - hereinafter the transferee and c the commissioner of internal revenue whereas on ------------------------ the transferor transferred the vessel identified on the attached appendix a to the transferee its wholly-owned subsidiary in exchange for stock of the transferee which stock was deemed constructively received by the transferor for federal_income_tax purposes due to the transferor's ownership of of the transferee's stock prior to and after the transfer of the vessel whereas the transferor transferee and commissioner desire to finally determine the effect of such exchange under section of the merchant marine act of as amended hereinafter the act the treasury regulations thereunder cfr part and sec_7518 of the internal_revenue_code_of_1986 as amended hereinafter the code whereas the transfer of the vessel to the transferee was conditionally approved by the secretary of commerce on date and whereas the transferor and the transferee have requested a private_letter_ruling in conjunction with this closing_agreement and made certain representations with respect to the request now it is hereby determined and agreed for federal_income_tax purposes provided that the representations incorporated in the private_letter_ruling attached are correct and the exchange qualifies under sec_351 of the code then with respect to the transfer of the vessel the provisions of proposed sec_26 cfr sec_3_6 as published on date in federal_register shall apply for purposes of determining ---- sec_7518 of the code the amounts of adjusted_basis and adjustments reflected in the adjusted_basis of the vessel in the hands of the transferee immediately_after_the_exchange including for purposes of applying section g of the act and sec_7518 of the code to a subsequent transaction involving such vessel by the transferee the treatment of such amounts of the adjustments reflected in the adjusted_basis of the vessel immediately_after_the_exchange as attributable to reductions in basis of the vessel in the hands of the transferee under section g and of the act and sec_7518 and of the code by reason of qualified withdrawals by the transferee from a capital_construction_fund whether or not it has such a fund for the vessel and the adjusted_basis in the hands of the transferor of the stock in the transferee received in exchange the amount of gain to be taken into account by the transferor under section g of the act and plr-128261-04 all other consequences of the exchange whereas the determinations as set forth above are hereby agreed to by the said transferor and transferee a c b this agreement is final and conclusive except if it relates to a tax period ending after the effective date of this agreement it is subject_to the matters to which it relates may be reopened in the event of fraud malfeasance or it is subject_to internal_revenue_code sections that expressly provide that effect be given their closing_agreement -- step ii vessel transfer now this closing_agreement witnesseth that the said transferor said transferee and said commissioner of internal revenue hereby mutually agree that misrepresentation of material fact provisions including any stated exception for sec_7122 notwithstanding any other law or rule_of law and any law enacted after the effective date of this agreement that applies to that tax period this agreement shall be effective as of the date four fully executed original copies of this agreement are executed by the commissioner this agreement may not be cited or relied upon by any person or entity whatsoever as precedent in the disposition of any other case by signing the above parties certify that they have read and agreed to the terms of this agreement ------------------------------------------------- by ---------------------------------------- by --------------------------------------- ---------------------------------------------------- ------------------------------------------------- by ----------------------------------- commissioner of internal revenue by associate chief_counsel passthroughs and special industries date date date date plr-128261-04 closing_agreement -- step ii vessel transfer appendix a to closing_agreement with ------------------------------------------------------------------------------------- --------------------------------------------------------------------------------------- and commissioner of internal revenue ------------------------------------------------- vessel acquired constructed or reconstructed with qualified withdrawals to be transferred u s coast guard registry no type general characteristics vessel name ------------------------------------------------------------------------ ------------------------------------------------------------------ plr-128261-04 closing_agreement on final_determination covering specific matters closing_agreement - step iii vessel transfer this closing_agreement is made in quadruplicate under and in pursuance of sec_7121 of the internal_revenue_code_of_1986 as amended by and between a ---------------------------------------------------------------- -----------------------------------whose the transferor and b ---------------------------------------------------------------------------------------------------------- --------------------------------------------------------------------------------------------------------------- whose taxpayer_identification_number is ----------------- hereinafter the transferee and c the commissioner of internal revenue ------------------- hereinafter identification_number taxpayer is whereas the transferor proposes to transfer an undivided 50-percent ownership_interest in the vessel identified on the attached appendix a to the transferee its wholly-owned subsidiary in exchange for stock of the transferee which stock will be deemed constructively received by the transferor for federal_income_tax purposes due to the transferor's ownership of of the transferee's stock prior to and after the transfer of the vessel whereas the transferor transferee and commissioner desire to finally determine the effect of such proposed exchange under section of the merchant marine act of as amended hereinafter the act the treasury regulations thereunder cfr part and sec_7518 of the internal_revenue_code_of_1986 as amended hereinafter the code whereas the transfer of the vessel was conditionally approved by the secretary of commerce on date and whereas the transferor and the transferee have requested a private_letter_ruling in conjunction with this closing_agreement and made certain representations with respect to the request now it is hereby determined and agreed for federal_income_tax purposes provided that the representations incorporated in the private_letter_ruling attached are correct and the proposed exchange qualifies under sec_351 of the code then with respect to the transfer of the vessel the provisions of proposed sec_26 cfr sec_3_6 as published on date in federal_register shall apply for purposes of determining ---- sec_7518 of the code the amounts of adjusted_basis and adjustments reflected in the adjusted_basis of the vessel in the hands of the transferee immediately_after_the_exchange including for purposes of applying section g of the act and sec_7518 of the code to a subsequent transaction involving such vessel by the transferee the treatment of such amounts of the adjustments reflected in the adjusted_basis of the vessel immediately_after_the_exchange as attributable to reductions in basis of the vessel in the hands of the transferee under section g and of the act and sec_7518 and of the code by reason of qualified withdrawals by the transferee from a capital_construction_fund whether or not it has such a fund for the vessel and the adjusted_basis in the hands of the transferor of the stock in the transferee received in exchange the amount of gain to be taken into account by the transferor under section g of the act and plr-128261-04 all other consequences of the proposed exchange whereas the determinations as set forth above are hereby agreed to by the said transferor and transferee c a b this agreement is final and conclusive except if it relates to a tax period ending after the effective date of this agreement it is subject_to the matters to which it relates may be reopened in the event of fraud malfeasance or it is subject_to internal_revenue_code sections that expressly provide that effect be given their closing_agreement - step iii vessel transfer now this closing_agreement witnesseth that the said transferor said transferee and said commissioner of internal revenue hereby mutually agree that misrepresentation of material fact provisions including any stated exception for sec_7122 notwithstanding any other law or rule_of law and any law enacted after the effective date of this agreement that applies to that tax period this agreement shall be effective as of the date four fully executed original copies of this agreement are executed by the commissioner this agreement may not be cited or relied upon by any person or entity whatsoever as precedent in the disposition of any other case by signing the above parties certify that they have read and agreed to the terms of this agreement --------------------------------- by ----------------------------------------- ---------------------------------------- by ----------------------------------- commissioner of internal revenue by associate chief_counsel passthroughs and special industries date date date plr-128261-04 appendix a to closing_agreement - step iii vessel transfer closing_agreement with ----------------------------------------------------------------- ----------------------------------------------------------------------- and commissioner of internal revenue ------------------------------------------------- vessel acquired constructed or reconstructed with qualified withdrawals to be transferred u s coast guard registry no type general characteristics vessel name -------------------------------------------------------------------------------------------------------------------- ----------------------------------------------------------------------- -------------------------------- plr-128261-04 closing_agreement -- step v vessel transfer closing_agreement on final_determination covering specific matters this closing_agreement is made in quadruplicate under and in pursuance of sec_7121 of the internal_revenue_code_of_1986 as amended by and between a ---------------------------------------------------------------- -------------------------- whose taxpayer_identification_number is ------ hereinafter the transferor b -------- ------------------------------------------------------------------------------------------------------------------------------------- ------------------- whose taxpayer_identification_number is --------------- hereinafter the transferee and c the commissioner of internal revenue whereas the transferor proposes to exchange the vessel identified on the attached appendix a hereinafter the first vessel with transferee for the three vessels identified on the attached appendix b hereinafter the second vessels whereas the transferor transferee and commissioner desire to finally determine the effect of such proposed exchange under section of the merchant marine act of as amended hereinafter the act the treasury regulations thereunder cfr part and sec_7518 of the internal_revenue_code_of_1986 as amended hereinafter the code whereas the transfer of the vessels was conditionally approved by the secretary of commerce on date and whereas the transferor and transferee have requested a private_letter_ruling in conjunction with this closing_agreement and made certain representations with respect to the request now it is hereby determined and agreed for federal_income_tax purposes provided that the representations incorporated in the private_letter_ruling attached are correct and the proposed exchange qualifies under sec_1031 of the code then with respect to the exchange of the first vessel for the second vessels the provisions of proposed sec_26 cfr sec_3_6 as published on date in federal_register shall apply for purposes of determining ---- of the act and sec_7518 of the code of each of the second vessels in the hands of the transferor and transferee immediately_after_the_exchange the treatment of such amounts of the adjustments reflected in the adjusted_basis of first vessel and of each of the second vessels immediately_after_the_exchange as attributable to reductions in basis of the first vessel and second vessels in the hands of the transferor and transferee under section g and of the act and sec_7518 and of the code by reason of qualified withdrawals by the transferor and transferee from a capital_construction_fund whether or not they have such a fund and whereas the determinations as set forth above are hereby agreed to by the said transferor and transferee the amounts of adjusted_basis and adjustments reflected in the adjusted_basis of the first vessel and the amount of gain to be taken into account by the transferor and transferee under section g all other consequences of the proposed exchange plr-128261-04 closing_agreement -- step v vessel transfer a c b this agreement is final and conclusive except if it relates to a tax period ending after the effective date of this agreement it is subject_to the matters to which it relates may be reopened in the event of fraud malfeasance or it is subject_to internal_revenue_code sections that expressly provide that effect be given their now this closing_agreement witnesseth that the said transferor transferee and said commissioner of internal revenue hereby mutually agree that misrepresentation of material fact provisions including any stated exception for sec_7122 notwithstanding any other law or rule_of law and any law enacted after the effective date of this agreement that applies to that tax period this agreement shall be effective as of the date four fully executed original copies of this agreement are executed by the commissioner this agreement may not be cited or relied upon by any person or entity whatsoever as precedent in the disposition of any other case by signing the above parties certify that they have read and agreed to the terms of this agreement ------------------------------- by ---------------------------------------- ----------------------------------------------------- -------------------------------------------------- by ______________________________ date _______________________ ---------------------------------------- commissioner of internal revenue by associate chief_counsel passthroughs and special industries date date plr-128261-04 closing_agreement -- step v vessel transfer appendix a to closing_agreement with ----------------------------------------------------------------- ---------------------------------------------------------------------------------------------------- and commissioner of internal revenue ------------------------------------------------- vessel acquired constructed or reconstructed with qualified withdrawals u s coast guard registry no type general characteristics vessel name --------------------------------------------------------------------------------------------------------------------- ------------------------------------------------------------------ plr-128261-04 closing_agreement - step vii vessel transfer closing_agreement on final_determination covering specific matters this closing_agreement is made in quadruplicate under and in pursuance of sec_7121 of the internal_revenue_code_of_1986 as amended by and between a ------------------------------------------------------------- ------------------------------------------------------------------------------------------------------------------------------- ------------------------------------------------------------------------------------------------------ the transferor and b ---------------------------------------------------------------------------------------------------------- ----------------------------------------------------------------------------------------------------------------whose taxpayer_identification_number is ----------------- hereinafter the transferee and c the commissioner of internal revenue hereinafter whereas the transferor proposes to transfer the vessel identified on the attached appendix a to the transferee its wholly-owned subsidiary in exchange for stock of the transferee which stock will be deemed constructively received by the transferor for federal_income_tax purposes due to the transferor's ownership of of the transferee's stock prior to and after the transfer of the vessel whereas the transferor transferee and commissioner desire to finally determine the effect of such proposed exchange under section of the merchant marine act of as amended hereinafter the act the treasury regulations thereunder cfr part and sec_7518 of the internal_revenue_code_of_1986 as amended hereinafter the code whereas the transfer of the vessel was conditionally approved by the secretary of commerce on date and whereas the transferor and the transferee have requested a private_letter_ruling in conjunction with this closing_agreement and made certain representations with respect to the request now it is hereby determined and agreed for federal_income_tax purposes provided that the representations incorporated in the private_letter_ruling attached are correct and the proposed exchange qualifies under sec_351 of the code then with respect to the transfer of the vessel the provisions of proposed sec_26 cfr sec_3_6 as published on date in federal_register shall apply for purposes of determining ---- sec_7518 of the code the amounts of adjusted_basis and adjustments reflected in the adjusted_basis of the vessel in the hands of the transferee immediately_after_the_exchange including for purposes of applying section g of the act and sec_7518 of the code to a subsequent transaction involving such vessel by the transferee the treatment of such amounts of the adjustments reflected in the adjusted_basis of the vessel immediately_after_the_exchange as attributable to reductions in basis of the vessel in the hands of the transferee under section g and of the act and sec_7518 and of the code by reason of qualified withdrawals by the transferee from a capital_construction_fund whether or not it has such a fund the amount of gain to be taken into account by the transferor under section g of the act and plr-128261-04 the adjusted_basis in the hands of the transferor of the stock in the transferee received in exchange for the vessel and whereas the determinations as set forth above are hereby agreed to by the said transferor and transferee all other consequences of the proposed exchange a c b this agreement is final and conclusive except if it relates to a tax period ending after the effective date of this agreement it is subject_to the matters to which it relates may be reopened in the event of fraud malfeasance or it is subject_to internal_revenue_code sections that expressly provide that effect be given their closing_agreement - step vii vessel transfer now this closing_agreement witnesseth that the said transferor said transferee and said commissioner of internal revenue hereby mutually agree that misrepresentation of material fact provisions including any stated exception for sec_7122 notwithstanding any other law or rule_of law and any law enacted after the effective date of this agreement that applies to that tax period this agreement shall be effective as of the date four fully executed original copies of this agreement are executed by the commissioner this agreement may not be cited or relied upon by any person or entity whatsoever as precedent in the disposition of any other case by signing the above parties certify that they have read and agreed to the terms of this agreement ----------------------------------------------------- by ---------------------------------------- by --------------------------------------- ------------------------------------ by ------------------------------------ commissioner of internal revenue date date date plr-128261-04 by associate chief_counsel passthroughs and special industries date closing_agreement - step vii vessel transfer appendix a to closing_agreement with ------------------------------------------------------------------------------------- -------------------------------------------------------------------- and commissioner of internal revenue ------------------------------------------------- vessel acquired constructed or reconstructed with qualified withdrawals to be transferred vessel name ----------------------------------------------------------------------------------------------------------------------- ------------------------------------------------------------------ type general characteristics u s coast guard registry no plr-128261-04 closing_agreement - step vii ccf transfer closing_agreement on final_determination covering specific matters this closing_agreement is made in quadruplicate under and in pursuance of sec_7121 of the internal_revenue_code_of_1986 as amended by and between a ------------------------------------------------------------- ----------------------------------------------whose taxpayer_identification_number is -------------------------------- --------------------------------------------------------------------------------------------- hereinafter the transferor and b ---------------------------------------------------------------------------------------------------------------------------- --------------------------------------------------------------------------------------------------whose taxpayer_identification_number is ---------------- hereinafter the transferee and c the commissioner of internal revenue whereas the transferor proposes to transfer property including property held in its capital_construction_fund as described in sec_26 cfr sec_3_1 hereinafter the fund to the transferee its wholly-owned subsidiary in exchange for stock of the transferee which stock will be deemed constructively received by the transferor for federal_income_tax purposes due to the transferor's ownership of of the transferee's stock prior to and after the transfer of the fund whereas the transfer of the fund to and maintenance of the fund by the transferee was conditionally approved by the secretary of commerce on -------------------- whereas the transferor transferee and commissioner desire to finally determine the effect of such proposed exchange under section of the merchant marine act of as amended hereinafter the act the treasury regulations thereunder cfr part and sec_7518 of the internal_revenue_code_of_1986 as amended hereinafter the code and whereas the transferor and the transferee have requested a private_letter_ruling in conjunction with this closing_agreement and made certain representations with respect to the request now it is hereby determined and agreed for federal_income_tax purposes provided that the representations incorporated in the private_letter_ruling attached are correct and the proposed exchange qualifies under sec_351 of the code then with respect to the transfer of the fund the provisions of proposed sec_26 cfr sec_3_8 as published on date in federal_register shall apply for purposes of determining ---- if the fund includes property covered by an election under sec_26 cfr sec_3_2 the amount of gain to be taken into account by the transferor under sec_26 cfr sec_3_2 and proposed sec_26 cfr sec_3_8 sec_2 the transferor's basis of the stock received in the exchange from the transferee except that proposed sec_3_8 b iv b shall not apply and instead the transferor’s basis in such stock shall be reduced by the entire amount if any in the capital_gain account whereas the determinations as set forth above are hereby agreed to by the said transferor and transferee now this closing_agreement witnesseth that the said transferor said transferee and said commissioner of internal revenue hereby mutually agree that the tax_attributes of the fund and property in the fund in the hands of the transferee and all other consequences of the proposed exchange plr-128261-04 closing_agreement - step vii ccf transfer c a b this agreement is final and conclusive except if it relates to a tax period ending after the effective date of this agreement it is subject_to the matters to which it relates may be reopened in the event of fraud malfeasance or it is subject_to internal_revenue_code sections that expressly provide that effect be given their misrepresentation of material fact provisions including any stated exception for sec_7122 notwithstanding any other law or rule_of law and any law enacted after the effective date of this agreement that applies to that tax period this agreement shall be effective as of the date four fully executed original copies of this agreement are executed by the commissioner this agreement may not be cited or relied upon by any person or entity whatsoever as precedent in the disposition of any other case by signing the above parties certify that they have read and agreed to the terms of this agreement ----------------------------------------------------- by ---------------------------------------- by --------------------------------------- ------------------------------------ by ------------------------------------ commissioner of internal revenue by associate chief_counsel passthroughs and special industries date date date date plr-128261-04 closing_agreement - step viii vessel transfer closing_agreement on final_determination covering specific matters this closing_agreement is made in quadruplicate under and in pursuance of sec_7121 of the internal_revenue_code_of_1986 as amended by and between a ------------------------------------------------------------- -------------------------------------------- whose taxpayer_identification_number is ---------------- hereinafter the transferor and b ---------------------------------------------------------------------------------------------------------- ----------------------------------------------------------------------------------------------------------------whose taxpayer_identification_number is ----------------- hereinafter the transferee and c the commissioner of internal revenue whereas the transferor proposes to transfer the vessels identified on the attached appendix a to the transferee its wholly-owned subsidiary in exchange for stock of the transferee which stock will be deemed constructively received by the transferor for federal_income_tax purposes due to the transferor's ownership of of the transferee's stock prior to and after the transfer of the vessels whereas the transferor transferee and commissioner desire to finally determine the effect of such proposed exchange under section of the merchant marine act of as amended hereinafter the act the treasury regulations thereunder cfr part and sec_7518 of the internal_revenue_code_of_1986 as amended hereinafter the code whereas the transfer of the vessels was conditionally approved by the secretary of commerce on date and whereas the transferor and the transferee have requested a private_letter_ruling in conjunction with this closing_agreement and made certain representations with respect to the request now it is hereby determined and agreed for federal_income_tax purposes provided that the representations incorporated in the private_letter_ruling attached are correct and the proposed exchange qualifies under sec_351 of the code then with respect to the transfer of each vessel the provisions of proposed sec_26 cfr sec_3_6 as published on date in federal_register shall apply for purposes of determining ---- sec_7518 of the code the amounts of adjusted_basis and adjustments reflected in the adjusted_basis of the vessel in the hands of the transferee immediately_after_the_exchange including for purposes of applying section g of the act and sec_7518 of the code to a subsequent transaction involving such vessel by the transferee the treatment of such amounts of the adjustments reflected in the adjusted_basis of the vessel immediately_after_the_exchange as attributable to reductions in basis of the vessel in the hands of the transferee under section g and of the act and sec_7518 and of the code by reason of qualified withdrawals by the transferee from a capital_construction_fund whether or not it has such a fund for the vessel and the adjusted_basis in the hands of the transferor of the stock in the transferee received in exchange the amount of gain to be taken into account by the transferor under section g of the act and all other consequences of the proposed exchange plr-128261-04 whereas the determinations as set forth above are hereby agreed to by the said transferor and transferee closing_agreement - step viii vessel transfer c a b this agreement is final and conclusive except if it relates to a tax period ending after the effective date of this agreement it is subject_to the matters to which it relates may be reopened in the event of fraud malfeasance or it is subject_to internal_revenue_code sections that expressly provide that effect be given their now this closing_agreement witnesseth that the said transferor said transferee and said commissioner of internal revenue hereby mutually agree that misrepresentation of material fact provisions including any stated exception for sec_7122 notwithstanding any other law or rule_of law and any law enacted after the effective date of this agreement that applies to that tax period this agreement shall be effective as of the date four fully executed original copies of this agreement are executed by the commissioner this agreement may not be cited or relied upon by any person or entity whatsoever as precedent in the disposition of any other case by signing the above parties certify that they have read and agreed to the terms of this agreement ----------------------------------------------------- by ---------------------------------------- by --------------------------------------- ------------------------------------ by ----------------------------------- commissioner of internal revenue by associate chief_counsel passthroughs and special industries date date date date plr-128261-04 closing_agreement - step viii vessel transfer appendix a to closing_agreement with ------------------------------------------------------------------------------------- -------------------------------------------------------------------- and commissioner of internal revenue ------------------------------------------------- vessels acquired constructed or reconstructed with qualified withdrawals to be transferred u s coast guard registry no type general characteristics vessel name --------------------------------------------------------------------------------------------------------------------- ------------------------------------------------------------------ ----------------------------------------------------------- ---------------------------------------------------------------------------------------------------------------------- ------------------------------------------------------------------ ----------------------------------------------------------------------------------------------------------------------- ------------------------------------------------------------------ --------------------------------------------------------------------------------------------------------------------------- ----------------------------------------------------------------------------- plr-128261-04 closing_agreement - step viii ccf transfer closing_agreement on final_determination covering specific matters this closing_agreement is made in quadruplicate under and in pursuance of sec_7121 of the internal_revenue_code_of_1986 as amended by and between a ------------------------------------------------------------- ----------------------------------------------whose taxpayer_identification_number is -------------------------------- --------------------------------------------------------------------------------------------- hereinafter the transferor and b --------------------------------------------------------------------------------------------------------whose taxpayer_identification_number is ----------------- hereinafter the transferee and c the commissioner of internal revenue whereas the transferor proposes to transfer property including property held in its capital_construction_fund as described in sec_26 cfr sec_3_1 hereinafter the fund to the transferee its wholly-owned subsidiary in exchange for stock of the transferee which stock will be deemed constructively received by the transferor for federal_income_tax purposes due to the transferor's ownership of of the transferee's stock prior to and after the transfer of the fund whereas the transfer of the fund to and maintenance of the fund by the transferee was conditionally approved by the secretary of commerce on -------------------- whereas the transferor transferee and commissioner desire to finally determine the effect of such proposed exchange under section of the merchant marine act of as amended hereinafter the act the treasury regulations thereunder cfr part and sec_7518 of the internal_revenue_code_of_1986 as amended hereinafter the code and whereas the transferor and the transferee have requested a private_letter_ruling in conjunction with this closing_agreement and made certain representations with respect to the request now it is hereby determined and agreed for federal_income_tax purposes provided that the representations incorporated in the private_letter_ruling attached are correct and the proposed exchange qualifies under sec_351 of the code then with respect to the transfer of the fund the provisions of proposed sec_26 cfr sec_3_8 as published on date in federal_register shall apply for purposes of determining ---- if the fund includes property covered by an election under sec_26 cfr sec_3_2 the amount of gain to be taken into account by the transferor under sec_26 cfr sec_3_2 and proposed sec_26 cfr sec_3_8 sec_2 the transferor's basis of the stock received in the exchange from the transferee except that proposed sec_3_8 b iv b shall not apply and instead the transferor’s basis in such stock shall be reduced by the entire amount if any in the capital_gain account whereas the determinations as set forth above are hereby agreed to by the said transferor and transferee the tax_attributes of the fund and property in the fund in the hands of the transferee and all other consequences of the proposed exchange plr-128261-04 closing_agreement - step viii ccf transfer a c b this agreement is final and conclusive except if it relates to a tax period ending after the effective date of this agreement it is subject_to the matters to which it relates may be reopened in the event of fraud malfeasance or it is subject_to internal_revenue_code sections that expressly provide that effect be given their now this closing_agreement witnesseth that the said transferor said transferee and said commissioner of internal revenue hereby mutually agree that misrepresentation of material fact provisions including any stated exception for sec_7122 notwithstanding any other law or rule_of law and any law enacted after the effective date of this agreement that applies to that tax period this agreement shall be effective as of the date four fully executed original copies of this agreement are executed by the commissioner this agreement may not be cited or relied upon by any person or entity whatsoever as precedent in the disposition of any other case by signing the above parties certify that they have read and agreed to the terms of this agreement ----------------------------------------------------- by ---------------------------------------- by --------------------------------------- ------------------------------------ by ----------------------------------- commissioner of internal revenue by associate chief_counsel passthroughs and special industries date date date date plr-128261-04 closing_agreement step ix vessel transfer closing_agreement on final_determination covering specific matters this closing_agreement is made in quadruplicate under and in pursuance of sec_7121 of the internal_revenue_code_of_1986 as amended by and between a ---------------------------------------------------------------- ----------------------------------------- whose taxpayer_identification_number is ------------------- hereinafter the transferor and b ---------------------------------------------------------------------------------------------------------- ---whose taxpayer_identification_number is ------------------- hereinafter the transferee and c the commissioner of internal revenue whereas the transferor proposes to transfer the vessel identified on the attached appendix a to the transferee its wholly-owned subsidiary in exchange for stock of the transferee which stock will be deemed constructively received by the transferor for federal_income_tax purposes due to the transferor's ownership of of the transferee's stock prior to and after the transfer of the vessel whereas the transferor transferee and commissioner desire to finally determine the effect of such proposed exchange under section of the merchant marine act of as amended hereinafter the act the treasury regulations thereunder cfr part and sec_7518 of the internal_revenue_code_of_1986 as amended hereinafter the code whereas the transfer of the vessel was conditionally approved by the secretary of commerce on date and whereas the transferor and the transferee have requested a private_letter_ruling in conjunction with this closing_agreement and made certain representations with respect to the request now it is hereby determined and agreed for federal_income_tax purposes provided that the representations incorporated in the private_letter_ruling attached are correct and the proposed exchange qualifies under sec_351 of the code then with respect to the transfer of the vessel the provisions of proposed sec_26 cfr sec_3_6 as published on date in federal_register shall apply for purposes of determining ---- sec_7518 of the code the amounts of adjusted_basis and adjustments reflected in the adjusted_basis of the vessel in the hands of the transferee immediately_after_the_exchange including for purposes of applying section g of the act and sec_7518 of the code to a subsequent transaction involving such vessel by the transferee the treatment of such amounts of the adjustments reflected in the adjusted_basis of the vessel immediately_after_the_exchange as attributable to reductions in basis of the vessel in the hands of the transferee under section g and of the act and sec_7518 and of the code by reason of qualified withdrawals by the transferee from a capital_construction_fund whether or not it has such a fund for the vessel and the adjusted_basis in the hands of the transferor of the stock in the transferee received in exchange the amount of gain to be taken into account by the transferor under section g of the act and plr-128261-04 all other consequences of the proposed exchange whereas the determinations as set forth above are hereby agreed to by the said transferor and transferee closing_agreement step ix vessel transfer a c b this agreement is final and conclusive except if it relates to a tax period ending after the effective date of this agreement it is subject_to the matters to which it relates may be reopened in the event of fraud malfeasance or it is subject_to internal_revenue_code sections that expressly provide that effect be given their now this closing_agreement witnesseth that the said transferor said transferee and said commissioner of internal revenue hereby mutually agree that misrepresentation of material fact provisions including any stated exception for sec_7122 notwithstanding any other law or rule_of law and any law enacted after the effective date of this agreement that applies to that tax period this agreement shall be effective as of the date four fully executed original copies of this agreement are executed by the commissioner this agreement may not be cited or relied upon by any person or entity whatsoever as precedent in the disposition of any other case by signing the above parties certify that they have read and agreed to the terms of this agreement ------------------------------------ by ------------------------------------ ---------------------------------------- by ------------------------------------ commissioner of internal revenue by associate chief_counsel passthroughs and special industries date date date plr-128261-04 appendix a to closing_agreement step ix vessel transfer closing_agreement with --------------------------------------------------------------------- ------------------------------------------------------------------------- and commissioner of internal revenue ------------------------------------------------- vessel acquired constructed or reconstructed with qualified withdrawals to be transferred u s coast guard registry no type general characteristics vessel name ----------------------------------------------------------------------------------------------------------------------- ------------------------------------------------------------------ plr-128261-04 closing_agreement - step ix ccf transfer closing_agreement on final_determination covering specific matters this closing_agreement is made in quadruplicate under and in pursuance of sec_7121 of the internal_revenue_code_of_1986 as amended by and between a ---------------------------------------------------------------- ----------------------------------------- whose taxpayer_identification_number is ------------------- hereinafter the transferor and b ---------------------------------------------------------------------------------------------------------- ---whose taxpayer_identification_number is ------------------- hereinafter the transferee and c the commissioner of internal revenue whereas the transferor proposes to transfer property including property held in its capital_construction_fund as described in sec_26 cfr sec_3_1 hereinafter the fund to the transferee its wholly-owned subsidiary in exchange for stock of the transferee which stock will be deemed constructively received by the transferor for federal_income_tax purposes due to the transferor's ownership of of the transferee's stock prior to and after the transfer of the fund whereas the transfer of the fund to and maintenance of the fund by the transferee was approved by the secretary of commerce on -------------------- whereas the transferor transferee and commissioner desire to finally determine the effect of such proposed exchange under section of the merchant marine act of as amended hereinafter the act the treasury regulations thereunder cfr part and sec_7518 of the internal_revenue_code_of_1986 as amended hereinafter the code and whereas the transferor and the transferee have requested a private_letter_ruling in conjunction with this closing_agreement and made certain representations with respect to the request now it is hereby determined and agreed for federal_income_tax purposes provided that the representations incorporated in the private_letter_ruling attached are correct and the proposed exchange qualifies under sec_351 of the code then with respect to the transfer of the fund the provisions of proposed sec_26 cfr sec_3_8 as published on date in federal_register shall apply for purposes of determining ---- if the fund includes property covered by an election under sec_26 cfr sec_3_2 the amount of gain to be taken into account by the transferor under sec_26 cfr sec_3_2 and proposed sec_26 cfr sec_3_8 sec_2 the transferor's basis of the stock received in the exchange from the transferee except that proposed sec_3_8 shall not apply and instead the transferor’s basis in such stock shall be reduced by the entire amount if any in the capital_gain account whereas the determinations as set forth above are hereby agreed to by the said transferor and transferee the tax_attributes of the fund and property in the fund in the hands of the transferee and all other consequences of the proposed exchange plr-128261-04 closing_agreement - step ix ccf transfer a c b this agreement is final and conclusive except if it relates to a tax period ending after the effective date of this agreement it is subject_to the matters to which it relates may be reopened in the event of fraud malfeasance or it is subject_to internal_revenue_code sections that expressly provide that effect be given their now this closing_agreement witnesseth that the said transferor said transferee and said commissioner of internal revenue hereby mutually agree that misrepresentation of material fact provisions including any stated exception for sec_7122 notwithstanding any other law or rule_of law and any law enacted after the effective date of this agreement that applies to that tax period this agreement shall be effective as of the date four fully executed original copies of this agreement are executed by the commissioner this agreement may not be cited or relied upon by any person or entity whatsoever as precedent in the disposition of any other case by signing the above parties certify that they have read and agreed to the terms of this agreement ------------------------------------ by ------------------------------------ ---------------------------------------- by ---------------------------------------- commissioner of internal revenue by associate chief_counsel passthroughs and special industries date date date plr-128261-04 closing_agreement - step xi ccf transfer closing_agreement on final_determination covering specific matters this closing_agreement is made in quadruplicate under and in pursuance of sec_7121 of the internal_revenue_code_of_1986 as amended by and between a ---------------------------------------------------------------- ------------------------------------------whose taxpayer_identification_number is ------------------- hereinafter the transferor and b and ----------------------------------------------------------------------------------------------------- -----------------------------------------------------------------------------------------------------------------whose taxpayer_identification_number is ----------------- hereinafter the transferee and c the commissioner of internal revenue whereas the transferor proposes to transfer property including property held in its capital_construction_fund as described in sec_26 cfr sec_3_1 hereinafter the fund to the transferee its wholly-owned subsidiary in exchange for stock of the transferee which stock will be deemed constructively received by the transferor for federal_income_tax purposes due to the transferor's ownership of of the transferee's stock prior to and after the transfer of the fund whereas the transfer of the fund to and maintenance of the fund by the transferee was approved by the secretary of commerce on -------------------- whereas the transferor transferee and commissioner desire to finally determine the effect of such proposed exchange under section of the merchant marine act of as amended hereinafter the act the treasury regulations thereunder cfr part and sec_7518 of the internal_revenue_code_of_1986 as amended hereinafter the code and whereas the transferor and the transferee have requested a private_letter_ruling in conjunction with this closing_agreement and made certain representations with respect to the request now it is hereby determined and agreed for federal_income_tax purposes provided that the representations incorporated in the private_letter_ruling attached are correct and the proposed exchange qualifies under sec_351 of the code then with respect to the transfer of the fund the provisions of proposed sec_26 cfr sec_3_8 as published on date in federal_register shall apply for purposes of determining ---- if the fund includes property covered by an election under sec_26 cfr sec_3_2 the amount of gain to be taken into account by the transferor under sec_26 cfr sec_3_2 and proposed sec_26 cfr sec_3_8 sec_2 the transferor's basis of the stock received in the exchange from the transferee except that proposed sec_3_8 shall not apply and instead the transferor’s basis in such stock shall be reduced by the entire amount if any in the capital_gain account whereas the determinations as set forth above are hereby agreed to by the said transferor and transferee the tax_attributes of the fund and property in the fund in the hands of the transferee and all other consequences of the proposed exchange plr-128261-04 a c b this agreement is final and conclusive except if it relates to a tax period ending after the effective date of this agreement it is subject_to the matters to which it relates may be reopened in the event of fraud malfeasance or it is subject_to internal_revenue_code sections that expressly provide that effect be given their closing_agreement - step xi ccf transfer now this closing_agreement witnesseth that the said transferor said transferee and said commissioner of internal revenue hereby mutually agree that misrepresentation of material fact provisions including any stated exception for sec_7122 notwithstanding any other law or rule_of law and any law enacted after the effective date of this agreement that applies to that tax period this agreement shall be effective as of the date four fully executed original copies of this agreement are executed by the commissioner this agreement may not be cited or relied upon by any person or entity whatsoever as precedent in the disposition of any other case by signing the above parties certify that they have read and agreed to the terms of this agreement ------------------------------------ by ---------------------------------------- ---------------------------------------- by ----------------------------------- commissioner of internal revenue by associate chief_counsel passthroughs and special industries date date date plr-128261-04 closing_agreement - step xiii vessel transfer closing_agreement on final_determination covering specific matters this closing_agreement is made in quadruplicate under and in pursuance of sec_7121 of the internal_revenue_code_of_1986 as amended by and between a ------------------------------------------------------------- ----------------------------------------------whose taxpayer_identification_number is -------------------------------- --------------------------------------------------------------------------------------------- hereinafter the transferor and b ---------------------------------------------------------------------------------------whose taxpayer_identification_number is --------------- and --------------------------------------------------------------------------------------------------- ----------------------------------------------------------------------------------------------------------------------- whose taxpayer_identification_number is ---------------- and ---------------------------------------------------------------------- ----------------------------- whose taxpayer_identification_number is ------- hereinafter the transferees and c the commissioner of internal revenue whereas the transferor proposes to transfer the vessels identified on the attached appendix a to the transferees its wholly-owned subsidiaries in exchange for stock of the transferees which stock will be deemed constructively received by the transferor for federal_income_tax purposes due to the transferor's ownership of of the transferees’ stock prior to and after the transfer of the vessels whereas the transferor transferees and commissioner desire to finally determine the effect of such proposed exchange under section of the merchant marine act of as amended hereinafter the act the treasury regulations thereunder cfr part and sec_7518 of the internal_revenue_code_of_1986 as amended hereinafter the code and whereas the transferor and the transferees have requested a private_letter_ruling in conjunction with this closing_agreement and made certain representations with respect to the request now it is hereby determined and agreed for federal_income_tax purposes provided that the representations incorporated in the private_letter_ruling attached are correct and the proposed exchange qualifies under sec_351 of the code then with respect to the transfer of each vessel the provisions of proposed sec_26 cfr sec_3_6 as published on date in federal_register shall apply for purposes of determining ---- sec_7518 of the code the amounts of adjusted_basis and adjustments reflected in the adjusted_basis of the vessel in the hands of each transferee immediately_after_the_exchange including for purposes of applying section g of the act and sec_7518 of the code to a subsequent transaction involving such vessel by the transferee the treatment of such amounts of the adjustments reflected in the adjusted_basis of the vessel immediately_after_the_exchange as attributable to reductions in basis of the vessel in the hands of each transferee under section g and of the act and sec_7518 and of the code by reason of qualified withdrawals by the transferee from a capital_construction_fund whether or not it has such a fund the amount of gain to be taken into account by the transferor under section g of the act and plr-128261-04 the adjusted_basis in the hands of the transferor of the stock in each transferee received in exchange for the vessel and whereas the determinations as set forth above are hereby agreed to by the said transferor and transferees all other consequences of the proposed exchange a c b this agreement is final and conclusive except if it relates to a tax period ending after the effective date of this agreement it is subject_to the matters to which it relates may be reopened in the event of fraud malfeasance or it is subject_to internal_revenue_code sections that expressly provide that effect be given their closing_agreement - step xiii vessel transfer now this closing_agreement witnesseth that the said transferor said transferees and said commissioner of internal revenue hereby mutually agree that misrepresentation of material fact provisions including any stated exception for sec_7122 notwithstanding any other law or rule_of law and any law enacted after the effective date of this agreement that applies to that tax period this agreement shall be effective as of the date four fully executed original copies of this agreement are executed by the commissioner this agreement may not be cited or relied upon by any person or entity whatsoever as precedent in the disposition of any other case by signing the above parties certify that they have read and agreed to the terms of this agreement ----------------------------------------------------- by -------------------------------------------- by ------------------------------------------- ------------------------------------ by ------------------------------------ ---------------------------------------- by ------------------------------------ ---------------------------------------- by date date date date date plr-128261-04 ----------------------------------- commissioner of internal revenue by associate chief_counsel passthroughs and special industries date closing_agreement - step xiii vessel transfer appendix a to closing_agreement with ------------------------------------------------------------------------------------- --------------------------------------------------------------------- -------------------------------------------------------------------------- ------------------------------------------------------------------------- and commissioner of internal revenue ------------------------------------------------- vessels acquired constructed or reconstructed with qualified withdrawals to be transferred u s coast guard registry no type general characteristics vessel name -------------------------------------------------------------------------------------------------------------------------- ------------------------------------------------------------------ --------------------------------------------------------------------------------------------------------------------- ------------------------------------------------------------------ plr-128261-04 closing_agreement - step xiv vessel transfer closing_agreement on final_determination covering specific matters this closing_agreement is made in quadruplicate under and in pursuance of sec_7121 of the internal_revenue_code_of_1986 as amended by and between a ---------------------------------------------------------------- ----------------------------- whose taxpayer_identification_number is --------- and --------------------------------------- ---------------------------------------------------------- whose taxpayer_identification_number is ------------------ and - ----------------------------------------------------------------------------------------------------whose taxpayer_identification_number is ----------------- hereinafter the transferors and b ---------------------------------------- ----------------------------------------------------------------- whose taxpayer_identification_number is ------------------- hereinafter the transferee and c the commissioner of internal revenue whereas the transferors propose to transfer the vessels identified on the attached appendix a to the transferee their wholly-owned subsidiary in exchange for stock of the transferee which stock will be deemed constructively received by the transferors for federal_income_tax purposes due to the transferors’ ownership of of the transferee's stock prior to and after the transfer of the vessels whereas the transferors transferee and commissioner desire to finally determine the effect of such proposed exchange under section of the merchant marine act of as amended hereinafter the act the treasury regulations thereunder cfr part and sec_7518 of the internal_revenue_code_of_1986 as amended hereinafter the code and whereas the transferors and the transferee have requested a private_letter_ruling in conjunction with this closing_agreement and made certain representations with respect to the request now it is hereby determined and agreed for federal_income_tax purposes provided that the representations incorporated in the private_letter_ruling attached are correct and the proposed exchange qualifies under sec_351 of the code then with respect to the transfer of each vessel the provisions of proposed sec_26 cfr sec_3_6 as published on date in federal_register shall apply for purposes of determining ---- sec_7518 of the code the amounts of adjusted_basis and adjustments reflected in the adjusted_basis of the vessel in the hands of the transferee immediately_after_the_exchange including for purposes of applying section g of the act and sec_7518 of the code to a subsequent transaction involving such vessel by the transferee the treatment of such amounts of the adjustments reflected in the adjusted_basis of the vessel immediately_after_the_exchange as attributable to reductions in basis of the vessel in the hands of the transferee under section g and of the act and sec_7518 and of the code by the amount of gain to be taken into account by each transferor under section g of the act and plr-128261-04 the adjusted_basis in the hands of each transferor of the stock in the transferee received in exchange reason of qualified withdrawals by the transferee from a capital_construction_fund whether or not it has such a fund for the vessel and whereas the determinations as set forth above are hereby agreed to by the said transferors and transferee all other consequences of the proposed exchange closing_agreement - step xiv vessel transfer a c b this agreement is final and conclusive except if it relates to a tax period ending after the effective date of this agreement it is subject_to the matters to which it relates may be reopened in the event of fraud malfeasance or it is subject_to internal_revenue_code sections that expressly provide that effect be given their now this closing_agreement witnesseth that the said transferors said transferee and said commissioner of internal revenue hereby mutually agree that misrepresentation of material fact provisions including any stated exception for sec_7122 notwithstanding any other law or rule_of law and any law enacted after the effective date of this agreement that applies to that tax period this agreement shall be effective as of the date four fully executed original copies of this agreement are executed by the commissioner this agreement may not be cited or relied upon by any person or entity whatsoever as precedent in the disposition of any other case by signing the above parties certify that they have read and agreed to the terms of this agreement ------------------------------------ by ------------------------------------ ---------------------------------------- by ------------------------------------ ---------------------------------------- by ----------------------------------- --------------------------------- by ---------------------------------------- date date date date plr-128261-04 commissioner of internal revenue by associate chief_counsel passthroughs and special industries date closing_agreement - step xiv vessel transfer appendix a to closing_agreement with --------------------------------------------------------------------- -------------------------------------------------------------------------- -------------------------------------------------------------------------- ----------------------------------------------------------------- and commissioner of internal revenue capital_construction_fund vessels acquired constructed or reconstructed with qualified withdrawals to be transferred vessel name --------------------------------------------------------------------------------------------------------------------------- -------------------------------------------------------------------- ------------------------------------------------------------------------------------------------------------- --------------------------------------------------------- type general characteristics u s coast guard registry no plr-128261-04 appendix b closing_agreement - step v vessel transfer ---------------------------------------------------------------- ---------------------------------------------------------------------------------------------------- closing_agreement with commissioner of internal revenue to and vessels acquired constructed or reconstructed with qualified capital_construction_fund withdrawals type general characteristics vessel name ------------------------------------------------------------------------------------------------------------------------- ------------------------------------------------------------------- ----------------------------------------------------------------------------------------------------------------------- ------------------------------------------------------------------- ------------------------------------------------------------------------------------------------------------------------ ------------------------------------------------------------------- u s coast guard registry no