Private Letter Ruling
201627001
Released July 1, 2016
Approved
IRS approves discrete mechanics of corporate separation
Apply this to your situation
This page covers one taxpayer's ruling from 2016, which can't be cited as precedent. Ezel answers your situation under the current Code and IRS guidance, with citations.
Not precedent. Under 26 U.S.C. § 6110(k)(3), this written determination may not be used or cited as precedent. It resolved one taxpayer's situation on its specific facts, and identifying details were redacted by the IRS before release. The official IRS release (linked on this page as a PDF) is the authoritative source.
About this page: The plain-English summary and ruling snapshot below were written by Ezel based on the official IRS release. The full text is the IRS's own document.
View official IRS release (PDF)
Plain-English summary
Two public-company groups combined and proposed separating one business into a new public company through internal contributions, distributions, borrowing, and shareholder exchanges. The IRS ruled on selected issues rather than the overall tax treatment of the separation. It approved the stated treatment of the internal contribution and excluded specified future-deductible liabilities from liability calculations under IRC §§ 357, 358, and 361. It also ruled that the proposed handling of cash and the pro rata distributions, share exchanges, and cleanup distribution would not prevent plan-of-reorganization treatment. For § 355(e) testing, public-shareholder exchanges and qualifying repurchases would be treated pro rata, while fractional-share sales and initial board designations would not affect the acquired ownership calculation.
Ruling snapshot
- Question: How will selected contribution, liability, cash-distribution, share-exchange, and ownership-testing steps be treated in the proposed separation?
- Outcome: Approved on nine discrete legal issues, with no ruling on the transaction's overall tax consequences
- Key authorities: IRC §§ 355(e), 357(c), 358(d), 361(b), and 368; Treas. Reg. § 1.368-2(g); Rev. Proc. 2015-1
Full text (IRS public release)
Internal Revenue Service Department of the Treasury
Washington, DC 20224
Number: 201627001 Third Party Communication: None
Release Date: 7/1/2016 Date of Communication: Not Applicable
Index Number: 355.10-00, 357.02-02,
361.02-00, 361.02-02, Person To Contact:
368.09-00 --------------------------, ID No. ----------------
-----------------
------------------------ Telephone Number:
------------------------------ ---------------------
---------------------------- Refer Reply To:
--------------------------- CC:CORP:B05
-------------------------------- PLR-123039-15
Date:
January 04, 2016
Legend
Combination = --------------------------------------
Partner 1 -----------------------
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Combination = -----------------------------
Partner 1 LLC -----------------------
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Combination = -----------------------------------------------------------------------------------------------------
Partner 2 --------------
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Distributing 1 = ---------------------------------------
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-----------------------------
Distributing 2 = ----------------------------
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Sub 1 = ------------------------------------------
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Sub 2 = ---------------------------
PLR-123039-15 2
Sub 3 = ------------------------------
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Sub 4 = ------------------------------
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DRE 1 = --------------------------------------
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DRE 2 = ------------------------------------------------
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Foreign Sub 1 = -------------------------------------------------
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Foreign Sub 2 = -------------------------------------------------
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Partnership = ------------------------------------
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External Spinco = ----------------------------
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Exchange A = -----------------------------------------
State A = -------------
PLR-123039-15 3
State B = ----------
Business A = -----------------------------------------------------------------------------------------------------
-----------------------------------------------------------------------------------------------------
------------------
Business B = -----------------------------------------------------------------------------------------------------
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Separation = -----------------------------------------------------------------------------------------------------
Agreement -----------------------------------------------------------------------------------------------------
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Tax Matters = -----------------------------------------------------------------------------------------------------
Agreement -----------------------------------------------------------------------------------------------------
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Employee Matters = -----------------------------------------------------------------------------------------------------
Agreement -----------------------------------------------------------------------------------------------------
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Transition = -----------------------------------------------------------------------------------------------------
Services -----------------------------------------------------------------------------------------------------
Agreement -----------------------------------------------------------------------------------------------------
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Shared Site = -----------------------------------------------------------------------------------------------------
Agreements -----------------------------------------------------------------------------------------------------
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Continuing = -----------------------------------------------------------------------------------------------------
Commercial -----------------------------------------------------------------------------------------------------
Agreements -----------------------------------------------------------------------------------------------------
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PLR-123039-15 4
Lease and = -----------------------------------------------------------------------------------------------------
Guarantee -----------------------------------------------------------------------------------------------------
Agreements -----------------------------------------------------------------------------------------------------
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Date A = -----------------
Date B = --------------------------
Date C = ------------------
Date D = ---------------------
Date E = -----------------
a = ------
b = ------
c = --
d = ---
e = ---
f = ---
g = --
h = ---
k = ---
m = ---
n = --
o = ---
p = --
q = --
PLR-123039-15 5
r = -------------
Dear ----------------:
This letter responds to your letter dated July 2, 2015, requesting rulings on certain
federal income tax consequences of the Proposed Transaction (defined below). The
information provided in that letter and in subsequent correspondence is summarized
below.
The rulings contained in this letter are based on facts and representations submitted by
the taxpayer and accompanied by a penalties 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. Verification of the information, representations, and other data
may be required as part of the audit process.
This letter is issued pursuant to section 6.03 of Rev. Proc. 2015-1, 2015-1 I.R.B. 1,
regarding one or more significant issues under §§ 332, 351, 355, 368, or 1036. The
rulings contained in this letter only address one or more discrete legal issues involved in
the transactions. This office expresses no opinion as to the overall tax consequences of
the transactions described in this letter or as to any issue not specifically addressed by
the rulings below.
SUMMARY OF FACTS
The Combination
Prior to the Combination (defined below), Combination Partner 1 was a public
corporation with a single class of stock which was traded on Exchange A. Combination
Partner 1 was the common parent of a group of domestic corporations filing a
consolidated federal income tax return and the parent of a group of foreign and
domestic entities.
Combination Partner 2 was a public corporation with a single class of stock which was
traded on Exchange A. Combination Partner 2 was the common parent of a group of
domestic corporations filing a consolidated federal income tax return and the parent of a
group of foreign and domestic entities.
The following transactions (together, the “Combination”) have been undertaken:
A. Distributing 2 was formed.
B. On Date A, a transitory subsidiary of Distributing 2 merged with and into
Combination Partner 2, with Combination Partner 2 surviving. Combination
PLR-123039-15 6
Partner 2 shareholders received cash and approximately a % of the
Distributing 2 stock.
C. On Date A, a transitory subsidiary of Distributing 2 merged with and into
Combination Partner 1, with Combination Partner 1 surviving. The
Combination Partner 1 shareholders received approximately b % of the
Distributing 2 stock.
D. On Date B, as part of an integrated plan with step C, Combination Partner 1
converted under State A law to become a limited liability company that is
disregarded as separate from Distributing 2 for U.S. federal income tax
purposes (i.e., “Combination Partner 1 LLC”).
Distributing 2 represents that it is intended that steps A, B, C, and D in the Combination
qualified for non-recognition treatment under applicable sections of the Code, except to
the extent that Combination Partner 2 shareholders received cash.
Post Combination
Distributing 2’s single class of common stock is traded on Exchange A and is widely
held. Through Combination Partner 1 LLC, Combination Partner 2, and their direct and
indirect subsidiaries, Distributing 2 conducts Business A and Business B.
Through Combination Partner 1 LLC, Distributing 2 owns all of the stock of Sub 1 and
Sub 2, c% of the stock of Sub 3, all of the membership interests in DRE 1 and DRE 2,
and d% of the partnership interest in Partnership. Sub 1 directly holds the remaining
e% of the stock of Sub 3. Combination Partner 1 LLC directly and indirectly owns all of
the outstanding equity of Foreign Sub 1. Foreign Sub 1 owns approximately f% and
Combination Partner 1 LLC owns the remaining approximately g% of the outstanding
equity in Foreign Sub 2.
To Distributing 2’s knowledge, with respect to the two-year period prior to the External
Distribution (defined below), (i) for the portion of such period ending with the
Combination, no shareholder of Combination Partner 1 was a “controlling shareholder”
or “ten percent shareholder” within the meaning of Treas. Reg. §1.355-7(h)(3) and (14),
and (ii) for the portion of such period beginning with the Combination, no shareholder of
Distributing 2 has been a “controlling shareholder” or “ten percent shareholder” within
the meaning of Treas. Reg. §1.355-7(h)(3) and (14). (Shareholders which are not
“controlling shareholders” or “ten percent shareholders” within the meaning of Treas.
Reg. §1.355-7(h)(3) and (14) are referred herein as “Public Shareholders”.)
PLR-123039-15 7
PROPOSED TRANSACTION
For what are represented as valid business purposes, Distributing 2 and its direct and
indirect subsidiaries propose to undertake the following steps (collectively, the
“Proposed Transaction”) in the order set forth below:
(i) In anticipation of the subsequent transaction steps, Combination Partner 1
LLC formed a new corporation Distributing 1 on Date C and new corporation
External Spinco on Date D, both as wholly-owned subsidiaries. External
Spinco formed wholly-owned subsidiary Sub 4 on Date E.
(ii) On the day prior to step (iii), Combination Partner 1 LLC will contribute the
stock of Sub 1 to Distributing 1.
(iii) Sub 1 will convert to a limited liability company (“DRE 4”) under State A law,
becoming an entity disregarded as separate from Distributing 1 for U.S.
federal income tax purposes.
(iv) DRE 4 will distribute its Business B workforce to Distributing 1. DRE 4 will
enter into an agreement with Distributing 1 whereby Distributing 1 will provide
certain services to DRE 4 until step (viii) occurs.
(v) Combination Partner 1 LLC will contribute its Business B workforce to
External Spinco (together with cash to fund working capital required by
External Spinco prior to step (vii), which may be contributed to External
Spinco in one or more contributions, some of which may be in advance of the
contribution of the workforce). Combination Partner 1 LLC will enter into an
agreement with External Spinco whereby External Spinco will provide certain
services to Combination Partner 1 LLC until step (vii) occurs.
(vi) Sub 2 will transfer certain administrative functions associated with the
Business B foreign expatriate employees to Sub 4. Sub 4 will enter into an
agreement with External Spinco, whereby Sub 4 will provide expatriate payroll
and benefits administration related services to External Spinco.
(vii) Combination Partner 1 LLC will transfer to External Spinco the ownership
interest in the U.S. Business B assets (including working capital net assets,
intangibles, contracts, vendor relationships, rights transferred pursuant to the
Lease and Guarantee Agreements, and cash to fund working capital (if any)
required by External Spinco prior to the External Distribution in one or more
cash contributions, but excluding the Combination Partner 1 LLC pension
plan), and the entirety of its interests in DRE 1, DRE 2, and Partnership in
exchange for External Spinco stock and the assumption of certain liabilities
associated with the assets transferred (including obligations pursuant to the
Lease and Guarantee Agreements), (collectively, and together with steps (v)
PLR-123039-15 8
and (xiii), the “External Spinco Contribution”). The liabilities assumed may
include certain liabilities, such as certain employee and retiree medical benefit
obligations, that are not fixed and determinable and economically performed
when assumed, and which will be deductible or capitalized into basis of
assets by External Spinco when paid (together with liabilities with similar
characteristics assumed in step (xiii),the “Distributing 2 Deductible
Liabilities”).
(viii) DRE 4 will assign the Business B assets that it holds to Distributing 1 and
Distributing 1 will assume associated liabilities from DRE 4.
(ix) Distributing 1 may borrow money from third-party lenders (the “Distributing 1
Borrowing Proceeds”). External Spinco may guarantee Distributing 1’s
performance of its obligations under this borrowing.
(x) Distributing 1 will contribute the Distributing 1 Borrowing Proceeds, if any, to
DRE 4 and will remain the obligor on any underlying debt to the third party
lenders.
(xi) DRE 4 will convert to become a corporation under State A law (“Internal
Spinco”), with such conversion being the “Internal Spinco Contribution.” At
the time of the Internal Spinco Contribution, the fair market value of
Distributing 1’s Business A assets will significantly exceed the amount of the
Distributing 1 Borrowing Proceeds.
(xii) Distributing 1 will distribute the stock of Internal Spinco to Combination
Partner 1 LLC (the “Internal Distribution”).
(xiii) Combination Partner 1 LLC will contribute to External Spinco all of the shares
of Distributing 1 and Combination Partner 1 LLC’s rights and obligations
under the Distributing 2 pension plan to the extent allocable to certain
Business B employees transferred to External Spinco, in exchange for
External Spinco stock, the assumption of certain liabilities associated with
assets transferred pursuant to the External Spinco Contribution, and cash
funded in whole or in part by the External Spinco Borrowing Proceeds,
(defined below). The liabilities assumed will include certain Combination
Partner 1 LLC liabilities, such as certain employee and retiree medical benefit
obligations, that are not fixed and determinable and economically performed
when assumed, and which will be deductible or capitalized into basis in
assets by External Spinco when paid.
(xiv) External Spinco will borrow funds from third party lenders (the “External
Spinco Borrowing Proceeds”). A portion of the External Spinco Borrowing
Proceeds will be transferred to Combination Partner 1 LLC pursuant to step
(xiii) above.
PLR-123039-15 9
(xv) External Spinco, together with DRE 1, and entity disregarded as separate
from External Spinco, will form a foreign entity which will elect to be classified
as a corporation for U.S. federal income tax purposes (“Foreign Sub 3”).
(xvi) External Spinco will contribute a portion of the External Spinco Borrowing
Proceeds to, and will also possibly lend funds to Foreign Sub 3. DRE 1 will
contribute and possibly lend its pro rata share to fund Foreign Sub 3.
(xvii) Foreign Sub 3 will acquire the foreign Business B assets through the
acquisition from Foreign Sub 2 of all of the shares of an entity disregarded as
separate from Foreign Sub 2 for federal income tax purposes (“DRE 3”) for
cash (and the deemed assumption of liabilities).
(xviii) Foreign Sub 3 will assign any assets it has to DRE 3 and DRE 3 will assume
any liabilities of Foreign Sub 3.
(xix) An election will be made to treat DRE 3 as a corporation for U.S. federal
income tax purposes.
(xx) Foreign Sub 3 will liquidate through certain transactions. As an alternative to
steps (xv) through (xx), the parties may undertake a different series of
transactions effecting a transfer of the foreign Business B assets to a foreign
subsidiary of External Spinco.
(xxi) Combination Partner 1 LLC will distribute the External Spinco stock and the
cash proceeds it received in the External Spinco Contribution to
Distributing 2.
(xxii) In order to distribute all of the single class of External Spinco stock to the
Distributing 2 shareholders (the “External Distribution”), Distributing 2 will (a)
distribute on a pro rata basis with respect to its common stock (a “Pro Rata
Distribution”) all of the stock of External Spinco to Distributing 2’s
shareholders on a single date, (b) offer to Distributing 2’s shareholders, on
one or more occasions, the right to exchange shares of Distributing 2’s
common stock for shares of External Spinco stock (each Exchange A “Share
Exchange” and, all exchanges together, the “Share Exchanges”), or (c) make
an initial Pro Rata Distribution of a portion of the stock of External Spinco to
Distributing 2’s shareholders and subsequently undertake one or more Share
Exchanges for an additional portion of such stock. If Distributing 2 retains any
External Spinco stock following the Share Exchanges, whether because they
are not fully subscribed or Distributing 2 is unable to or chooses not to
implement any Share Exchanges following an initial partial Pro Rata
Distribution, Distributing 2 will distribute the remaining External Spinco stock
to its shareholders on a pro rata basis (the “Clean-Up Distribution”). All Share
Exchanges, and Pro Rata Distributions, if any, will occur within h months of
PLR-123039-15 10
the completion of the External Spinco Contribution. Fractional shares of
External Spinco will be aggregated by an exchange agent and sold on the
market (the “Fractional Shares Sale”), with the applicable Distributing 2
shareholders who would have otherwise received such fractional shares
receiving their respective share of the proceeds.
In addition, in connection with implementation of the Proposed Transaction, certain
intercompany debts may be eliminated through repayment, contribution, distribution, or
set-off.
After the Internal Distribution, Internal Spinco will loan the Distributing 1 Borrowing
Proceeds, if any, to Distributing 2 to allow Distributing 2 to repay debt, make dividend
distributions to shareholders, or use for general corporate purposes, and Internal Spinco
may loan a portion of Distributing 1 Borrowing Proceeds, if any, to other Distributing 2
affiliates to use to repay debt or for other general corporate purposes.
In the h-month period following the completion of the External Spinco Contribution,
Distributing 2, directly or through Combination Partner 1 LLC, will use an amount of
cash equal to or greater than the cash received pursuant to the External Spinco
Contribution to make distributions to its shareholders, pay its liabilities to third-party
creditors (which could include ordinary course liabilities whenever incurred and
principal, interest, and associated consent and other fees on bank debt, bonds, and
other borrowings), or a combination thereof. Distributing 2 will not set aside, trace, or
otherwise segregate the actual cash received pursuant to the External Spinco
Contribution. The manner in which Distributing 2 will hold or dispose of the actual cash
received in the External Spinco Contribution, the timeframe during which Distributing 2
will use an equivalent amount of cash, and the purposes for which Distributing 2 will use
such equivalent amount of cash, as described in this paragraph, are referred to herein
as the “Manner of Making Purging Distributions.”
Following the proposed transaction, Distributing 2 (and its worldwide group) and
External Spinco (and its worldwide group) will have certain continuing arrangements
and relationships (collectively, the “Continuing Arrangements”). These will include the
Separation Agreement, Tax Matters Agreement, Employee Matters Agreement,
Transition Services Agreement, Shared Site Agreements, Continuing Commercial
Agreements, and the Lease and Guarantee Agreement. The Shared Site Agreements
will have an expected initial term of up to k years and the Continuing Commercial
Agreements will have expected initial terms of up to m years. The Transition Service
Agreement will have a term of no longer than n years unless later extended by mutual
agreement of the parties. Except for certain cost or cost-based pricing or sharing under
portions of the Shared Site Agreements and under the Transition Services Agreement,
all agreements for the future provision of goods, services, or the use of sites provide for
market-based pricing and reflect arm’s length terms.
PLR-123039-15 11
Pursuant to the Combination approved by the shareholders of Combination Partner 1
and by the shareholders of Combination Partner 2, the Distributing 2 board of directors
initially consisted of o directors, p having been designated by Combination Partner 1
and q by Combination Partner 2. All such directors will be required to stand for election
in the normal course of business following the Combination. The External Spinco board
of directors will consist entirely of directors that are not also directors of Distributing 2.
The External Spinco directors will be required to stand for election in the normal course
of business following the External Distribution. The officers of Distributing 2 and the
officers of External Spinco will not overlap following the Proposed Transaction.
Each of Combination Partner 1 and Combination Partner 2 had a share repurchase
program prior to the Combination. The Distributing 2 board of directors has authorized
a plan to purchase up to r shares of Distributing 2 stock, and Distributing 2 has
continued to, and expects to, repurchase shares after the Combination and after the
Proposed Transaction. Such share repurchases will be made through open market
repurchases, one or more accelerated share repurchase (“ASR”) programs, one or
more tender offers open to all holders of Distributing 2 common stock, or a combination
thereof (all share repurchases by Combination Partner 1 and by Distributing 2, the
“Share Repurchases”). Under a typical ASR program, a corporation would repurchase
a specified number or volume range of its shares from a third-party investment bank at
an agreed-upon price per share or other price mechanism, the bank would obtain the
shares by borrowing shares (e.g., from customers or mutual funds), the bank would buy
shares, typically on the open market, over time to return the borrowed shares, and there
may be a true-up adjustment as between the corporation and the bank at the maturity of
the program. The Share Repurchases have been, and are expected to be, used to
offset dilution from issuance of shares under compensatory equity plans, to return to
stockholders cash generated from extraordinary asset divestitures, and to achieve a
targeted capital structure and leverage ratio.
REPRESENTATIONS
(a) The liabilities assumed by Internal Spinco in the Internal Spinco Contribution
and the liabilities to which the assets transferred in the Internal Spinco
Contribution are subject were incurred in the ordinary course of business and
are associated with the assets being transferred.
(b) The liabilities assumed by External Spinco in the External Spinco
Contribution, including the Distributing 2 Deductible Liabilities, and the
liabilities to which the assets transferred in the External Spinco Contribution
are subject, including the Distributing 2 Deductible Liabilities, were incurred in
the ordinary course of business and are associated with the assets being
transferred.
PLR-123039-15 12
(c) The incurrence of the Distributing 2 Deductible Liabilities that will be assumed
by External Spinco, if any, did not result in the creation of, or increase in,
basis of any assets of Distributing 2 or External Spinco or the stock of
Distributing 2 or External Spinco.
(d) The Distributing 2 Deductible Liabilities are liabilities accrued by Distributing 2
for financial accounting purposes, but will not meet the timing requirements
for a deduction by Distributing 2 before the External Spinco Contribution
under Distributing 2’s method of tax accounting. The Distributing 2
Deductible Liabilities will meet the timing requirements for a deduction by
External Spinco after the External Distribution under External Spinco’s
method of tax accounting.
(e) There is no plan to liquidate Internal Spinco or to merge it with or into
Distributing 2 or any other affiliate.
(f) There is no plan for Internal Spinco to distribute the Distributing 1 Borrowing
Proceeds (or any notes received from any intercompany loans) to
Distributing 2.
(g) The Share Repurchases were not, and will not be, related to the Proposed
Transaction, and are expected to occur at approximately the same times, and
to be in the same or lesser amount, as the Share Repurchases that would
have occurred if Distributing 2 did not undertake the External Distribution.
(h) The receipt by Distributing 2 shareholders of cash in lieu of fractional shares
of External Spinco stock, if any, is solely for the purpose of avoiding the
expense and inconvenience to External Spinco of issuing and maintaining
fractional shares and will not represent separately bargained for
consideration. Any fractional share interests of a Distributing 2 shareholder
will be aggregated, and no Distributing 2 shareholder of record will receive
cash in an amount equal to or greater than the value of one share of External
Spinco.
RULINGS
Based solely on the information submitted, we rule as follows:
(1) The Internal Spinco Contribution will be treated as the transfer of the
Distributing 1 Borrowing Proceeds, if any, and Business A assets by
Distributing 1 to Internal Spinco in exchange for Internal Spinco stock and the
assumption of, or taking subject to, liabilities associated with those
Business A assets.
PLR-123039-15 13
(2) The Distributing 2 Deductible Liabilities will be excluded in determining the
amount of liabilities of Distributing 2 (or of Combination Partner 1 LLC)
assumed by External Spinco for purposes of Sections 357(c), 358(d), and
361(b)(3).
(3) Provided Distributing 2's transfers of cash in an amount equal to the cash
received in the External Spinco Contribution (or a part thereof) otherwise
qualify as distributions in pursuance of the plan of reorganization within the
meaning of Section 361(b)(1)(A) (including by reason of Section 361(b)(3)),
Distributing 2's Manner of Making Purging Distributions will not prevent
Distributing 2’s receipt of cash in the External Spinco Contribution (or a
corresponding part thereof) from qualifying under those provisions.
(4) Any Pro Rata Distribution, Share Exchange, and Clean-Up Distribution
composing the External Distribution will be treated as occurring pursuant to a
plan of reorganization within the meaning of Treas. Reg. § 1.368-2(g).
(5) For purposes of testing the effect of the Share Exchanges on the External
Distribution or the Internal Distribution under Section 355(e), the Share
Exchanges from Public Shareholders will be treated as being made from all
Public Shareholders of Distributing 2 on a pro rata basis.
(6) Any increase in the percentage of either voting power or value of the stock of
Distributing 2 or External Spinco (or of Distributing 1 or Internal Spinco)
owned by a shareholder by virtue of the Share Exchanges will be taken into
account for purposes of section 355(e) only after reducing such increase for
any reduction, directly or indirectly, in such shareholder’s interest resulting
from any Share Exchanges.
(7) The Fractional Share Sales will not affect the determination of the total voting
power or value of the stock of Distributing 2 or External Spinco (or of
Distributing 1 or Internal Spinco) acquired within the meaning of Section
355(e).
(8) The initial designations of the members of the Distributing 2 board of directors
and the External Spinco board of directors will not affect the determination of
the total voting power or value of the stock of Distributing 2 or External Spinco
(or of Distributing 1 or Internal Spinco) acquired within the meaning of Section
355(e).
(9) For purposes of testing the effect of the Share Repurchases on the External
Distribution or the Internal Distribution under Section 355(e), the Share
Repurchases by Public Shareholders will be treated as being made from all
Public Shareholders of Distributing 2 on a pro rata basis. Any increase in the
percentage of either voting power or value of the stock of Distributing 2 or
PLR-123039-15 14
External Spinco (or Distributing 1 or Internal Spinco) owned by a shareholder
by virtue of the Share Repurchases will be taken into account for purposes of
Section 355(e) only after reducing such increase for any reduction, directly or
indirectly, in such shareholder’s interest resulting from the Share
Repurchases. The effect of the Share Repurchases will be taken into
account under Section 355(e) and this ruling only to the extent such Share
Repurchases are otherwise treated for purposes of Section 355(e) as part of
a plan (or series of related transactions) with the External Spinco Distribution
or the Internal Distribution.
CAVEATS
Except as expressly provided herein, no opinion is expressed or implied concerning the
tax treatment of any aspect of the Proposed Transaction under any provision of the
Code and regulations, or the tax treatment of any condition existing at the time of, or
effects resulting from the Proposed Transaction that is not specifically covered by the
above rulings.
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.
In accordance with the Power of Attorney on file with this office, a copy of this letter is
being sent to your authorized representative.
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 the
letter ruling.
Sincerely,
_Richard M. Heinecke______
Richard M. Heinecke
Assistant to the Branch Chief, Branch 5
(Corporate)
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