Delayed stock dispositions do not disturb prior spin-off ruling

Plain-English summary

A taxpayer asked the IRS to supplement an earlier ruling on a corporate spin-off under IRC § 355. Registration of retained controlled-company stock with the Securities and Exchange Commission had been delayed, so the taxpayer revised the deadline for open-market dispositions while still committing to act as soon as reasonably possible. It reaffirmed the earlier representations with a revised schedule for disposing of the retained stock, including stock used for deferred incentive awards. The IRS ruled that the supplemental facts would have no adverse effect on the prior ruling, which remained fully effective. The letter addressed only this discrete significant issue and gave no opinion on the transaction's overall tax consequences.

Ruling snapshot

• Question: Does the revised timing for disposing of retained controlled-company stock adversely affect the prior IRC § 355 ruling?
• Outcome: Approved, the prior ruling remains in full force
• Key authorities: IRC § 355; Rev. Proc. 2016-1

Full text (IRS public release)

Internal Revenue Service                                         Department of the Treasury
                                                                 Washington, DC 20224

Number: 201626017                                                Third Party Communication: None
Release Date: 6/24/2016                                          Date of Communication: Not Applicable
Index Number: 355.00-00, 355.01-00
                                                                 Person To Contact:
------------------------                                         ----------------, ID No. ----------------
----------------------------------------------                   Telephone Number:
------------------------------------------                       ------------------
----------------------------                                     Refer Reply To:
 ---------------------------------                               CC:CORP:2
                                                                 PLR-138044-15
                                                                 Date:
                                                                 March 28, 2016


Legend

Date 2                     =        --------------------------

Dear ---------------:

This letter responds to your representative’s letter dated November 17, 2015,
requesting that we supplement the private letter ruling dated October 10, 2014 (PLR-
119947-14) (the “Prior Ruling”). The material information submitted for consideration is
summarized below. Capitalized or underlined terms not defined in this letter have the
meanings assigned to them in the Prior Ruling.

The ruling contained in this letter is based upon the 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 ruling, it is subject to verification on examination.

This letter and the ruling contained herein are issued pursuant to section 6.03 of Rev.
Proc. 2016-1, 2016-1 I.R.B. 1, regarding a significant issue under section 355 and only
addresses a discrete legal issue involved in the Proposed Transaction (as modified
herein). This Office expresses no opinion as to the overall tax consequences of the
transactions described in this letter, or as to any issues not specifically addressed by
the ruling below.

                                         SUPPLEMENTAL FACTS

The facts as described in the Prior Ruling are unchanged except that, due to a delay in
the process of registering the Retained Controlled Stock with the Securities Exchange
Commission, all Open Market Dispositions will still occur as soon as reasonably
possible, but in no event later than Date 2, as opposed to u years following the date of
the Distribution.

PLR-138044-15                                  2


                                   REPRESENTATIONS

The Representations contained in the Prior Ruling are reaffirmed except for
Representation 3, which is restated to read as follows:

      3. The Retained Controlled Stock will be disposed of only through the
         Dispositions described in the Proposed Transaction (as modified herein), as
         soon as a Disposition is warranted, consistent with the business purposes of
         the Retention. With the potential exception of Stock Award Dispositions in
         settlement of Deferred Incentive Awards, all Dispositions of the Retained
         Controlled Stock will be made not later than aa years after the Distribution.
         Additionally, all Open Market Dispositions will occur as soon as reasonably
         possible, but no later than Date 2. The Retained Controlled Stock payable with
         respect to Deferred Incentive Awards, which include the Deferred Director
         Shares, will be disposed of in a Stock Award Disposition immediately upon
         termination of the deferral period of the respective Deferred Incentive Awards.

                                SUPPLEMENTAL RULING

The supplemental facts submitted will have no adverse impact on the Ruling in the Prior
Ruling, which remains in full force and effect.

                                          CAVEAT

Except as expressly stated in the ruling section herein, no opinion is expressed or
implied concerning the tax consequences of any aspect of any transaction or item
discussed or referenced in this letter.

                              PROCEDURAL STATEMENTS

This ruling is directed only to the taxpayer requesting it. Section 6110(k)(3) of the Code
provides that it may not be used or cited as precedent. A copy of this letter must be
attached to any income tax return to which it is relevant. Alternatively, taxpayers filing
their returns electronically may satisfy this requirement by attaching a statement to their
return that provides the date and control number of this letter ruling (PLR-138044-15).

In accordance with the Power of Attorney on file with this office, a copy of this letter is
being sent to your authorized representative.

                                       Sincerely,


                                       Kevin M. Jacobs
                                       Senior Technician Reviewer, Branch 4
                                       Office of Associate Chief Counsel (Corporate)

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