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C12-Chp-07-7-LTR 201147018-Split-off

C12-Chp-07-7-LTR 201147018-Split-off - Page 1 of 2...

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bf68255e8ca5a56758b2dde44ef220d7dd4792ff. Page 1 of 2 Distribution of stock & securities of controlled corporation; Spin-off; Split-off. IRS Letter Ruling 201147018 (Aug. 24, 2011) [Code Secs. 355 and 368] Distribution of stock and securities of a controlled corporation; Spin-off; Split-off; Definitions relating to corporate reorganizations; Assets for control of transferee (Type "d"). This letter responds to your authorized representative's letter dated June 13, 2011, requesting rulings under sections 355 and 368 and related provisions with respect to a proposed transaction described below (the “Proposed Transaction”). The information submitted in that request and in subsequent correspondence is summarized below. The rulings contained in this letter are based on information and representations submitted by the taxpayer and accompanied by a penalty of perjury statement executed by an appropriate party. This office has not verified any of the material submitted in support of the request for rulings. …. FACTS Distributing (let’s call this Big Corp) is the common parent of an affiliated group of corporations that files a consolidated federal income tax return. Distributing has one class of common stock and one class of preferred stock outstanding. Shareholder Group A and Shareholder Group B together own over a percent of the Distributing common stock. The remainder of the Distributing common stock is owned by employees, directors, and other affiliated and unaffiliated persons, no one of which owns five percent or more of the Distributing stock. The Distributing preferred stock is closely held by members of Shareholder Group A. (Big Corp) Distributing conducts Business itself and through its wholly owned subsidiaries, Sub 1 and Sub 2. Distributing has submitted financial information indicating that Business has had gross receipts and operating expenses representing the active conduct of a trade or business for each of the past five years. PROPOSED TRANSACTION For what are represented to be valid business reasons, Distributing proposes to undertake the following steps (the “Proposed Transaction”): (i) Distributing formed Controlled (let’s call this New Corp) and will contribute the assets and liabilities constituting
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