Rev. Rul. 57-144: Disqualified spin-off; control not met

In Rev. Rul. 99-6, the IRS provides that certain transfers of partnership interests cause termination of a partnership.

Rev. Rul. 57-144: Disqualified spin-off; control not met

In Rev. Rul. 99-6, the IRS provides that certain transfers of partnership interests cause termination of a partnership.

Citations: Rev. Rul. 57-144; 1957-1 C.B. 123

Rev. Rul. 57-144

A parent corporation qualifying as a personal holding company owned 82 percent and 83 percent of the capital stock of two operating subsidiaries, corporations A and B , respectively. In order to simplify the corporate structure and to eliminate the existence of the parent corporation as a personal holding company, the management of the parent corporation distributed pro rata the stock of corporation A to its (the parent's) stockholders. After the distribution of such stock, corporation B was merged with the parent corporation. The parent corporation obtained control (80 percent of the stock) of corporation B during the five-year period preceeding the date of distribution as the result of the latter's redeeming a portion of the minority interest, which at that time exceeded 20 percent. Held , the distribution of corporation A's stock does not qualify as a tax-free `spin-off' transaction under section 355(a)(1) of the Internal Revenue Code of 1954, since after the distribution the parent corporation owned only the stock of corporation B , control of which was acquired in a taxable transaction less than five years prior to the date of the distribution. See section 355(b)(2)(D)(i) of such Code. The result would be the same whether the stock of corporation A was distributed before or after the merger of corporation B into the parent corporation. Therefore, such distribution should be treated as a dividend, to the extent of the parent corporation's earning and profits available under sections 301 and 316 of the Code.

‍

Product heading

Lorem ipsum dolor sit amet, consectetur adipiscing elit, sed do eiusmod tempor incididunt ut labore et dolore magna aliqua.

Get Started

Related Diagrams

10 Min Read

Rev. Rul. 82-150: Deep-in-the-money options

In Rev. Rul. 82-150, the IRS holds that a sale of a deep-in-the-money option was, in substance, not an option but a completed sale of the referenced stock for purposes of the foreign personal holding company rules.

Explore Diagrams
10 Min Read

Rev. Rul. 70-224: Cause to be directed; § 368(a)(2)(C)

Rev. Rul. 70-224: It is held that the transaction in the instant case is an acquisition by X, solely in exchange for its voting stock and the assumption of Z's liabilities, of substantially all of the properties of Z, and is, therefore, a reorganization within the meaning of section 368(a)(1)(C) and section 368(a)(2)(C) of the Code. The fact that all the assets of Z were transferred directly to Y rather than through X to Y does not affect the reorganization.

Explore Diagrams
10 Min Read

Rev. Rul. 2001-46, Sit. 2: Acquisition merger & upstream merger collapsed

Rev. Rul. 2001-46, Sit. 2: Under the facts presented, if, pursuant to an integrated plan, a newly formed wholly owned subsidiary of an acquiring corporation merges into a target corporation, followed by the merger of the target corporation into the acquiring corporation, the transaction is treated as a single statutory merger of the target corporation into the acquiring corporation that qualifies as a reorganization under section 368(a)(1)(A).

Explore Diagrams