International Tax Watch: Is 351 the New F? The IRS Revokes Rev. Rul. 78-130 and Blesses the Form of the "Triple Drop and Check" in Rev. Rul. 2015-9 and Rev. Rul. 2015-10

In Rev. Rul. 2015-9 , IRB 2015-21, 1 and Rev. Rul. 2015-10 , IRB 2015-21, 1, the IRS clarified its position on asset reorganizations involving entities that are located in different "tiers" and in different ownership chains. The rulings address a fact pattern that occurs often in internal...

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Bibliographic Details
Published inTaxes Vol. 93; no. 9; p. 5
Main Authors Lipeles, Stewart R, McDonald, John D, Christenson, Erik J, Kroll, Ethan S
Format Trade Publication Article
LanguageEnglish
Published Riverwoods CCH INCORPORATED 01.09.2015
Subjects
Asset acquisitions
Disregarded entities
Foreign subsidiaries
Internal Revenue Code
Revenue procedures & rulings
Subsidiaries
Transfer taxes
United States > US
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Summary:In Rev. Rul. 2015-9 , IRB 2015-21, 1 and Rev. Rul. 2015-10 , IRB 2015-21, 1, the IRS clarified its position on asset reorganizations involving entities that are located in different "tiers" and in different ownership chains. The rulings address a fact pattern that occurs often in internal restructurings, consisting of essentially two stages. In the first stage, the parent corporation transfers stock of a first-tier target subsidiary through another chain of subsidiaries consisting of two or more tiers. In the next (and final) stage, the target entity transfers its assets to the final transferee corporation in liquidation (or in a merger). The uncertainty stemmed largely from the potential application of two conflicting sources, Rev. Rul. 78-130 and the "Stockless D" rules of Reg. Section 1.368-2(1). Each of the new rulings concludes that a transfer of stock of one subsidiary to another subsidiary is respected as a Code Sec. 351 exchange as long as the overall substance does not require a different result.
ISSN:0040-0181