IRS approves a tax-free corporate spin-off separating two businesses through a chain of internal and external reorganizations

Plain-English summary

A corporate parent wanted to separate two of its business lines (Business A from Business B) and distribute Business A to its public shareholders. To do that it planned a series of transactions: several internal spin-offs (including cross-border spins in another country) that regroup the businesses inside the corporate structure, followed by an external spin-off that hands new stock of a spun-off company to the public shareholders. The parent asked the IRS to confirm the whole chain would be tax-free. The IRS ruled favorably on all of it. Each internal spin and the external spin qualifies as a tax-free reorganization under sections 368(a)(1)(D) and 355, so no gain or loss is recognized by the distributing corporations, the newly controlled corporations, or the shareholders. Standard nonrecognition consequences follow: carryover asset basis (section 362(b)), tacked holding periods (section 1223), basis allocation between the retained and spun-off stock (section 358), and allocation of earnings and profits (section 312(h)). In plain terms, a corporate group can split off a business unit to its shareholders without triggering corporate-level or shareholder-level tax, as long as the deal meets the section 355 requirements. The ruling rests entirely on the taxpayer's representations, is limited to the issues addressed, and is the kind of letter a large company obtains before executing a public spin-off.

Ruling snapshot

• Question: Do a series of internal spin-offs and an external spin-off separating Business A from Business B qualify as tax-free reorganizations under sections 355 and 368(a)(1)(D), with the usual nonrecognition and basis consequences?
• Outcome: Approved (53 favorable rulings)
• Key authorities: IRC §§ 355, 368(a)(1)(D), 361, 357(a), 362(b), 358(b), 1032(a), 1223, 312(h); Treas. Reg. §§ 1.358-2(a)(2), 1.312-10(a); Rev. Proc. 2017-52 (as amplified/modified by Rev. Proc. 2018-53)

Full text (IRS public release)

Internal Revenue Service                                     Department of the Treasury
                                                             Washington, DC 20224

Number: 202332001                                            [Third Party Communication:
Release Date: 8/11/2023                                      Date of Communication: Month DD, YYYY]

Index Number: 355.00-00, 355.01-00,                          Person To Contact:
              355.01-01, 361.00-00,                          -----------------------, ID No. -----------------
              361.02-00, 361.02-02,                          Telephone Number:
              368.00-00, 368.04-00                           --------------------
                                                             Refer Reply To:
-------------------------------------------------------      CC:CORP:4
----------------------------------------------------------   PLR-101150-23
--------------------------------                             Date:
---------------------------------------------------          May 10, 2023




Distributing            = -------------------------------------------------------------------------------------
Parent                    -------------------------------------------------------------------------------------
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Distributing 1          = -------------------------------------------------------------------------------------
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Distributing 2          = -------------------------------------------------------------------------------------
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Distributing 3          = -------------------------------------------------------------------------------------
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Distributing 4          = -------------------------------------------------------------------------------------
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External Spinco         = -------------------------------------------------------------------------------------
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PLR-101150-23                                   2



Controlled 1    = -------------------------------------------------------------------------------------
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Controlled 2    = -------------------------------------------------------------------------------------
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Controlled 3    = -------------------------------------------------------------------------------------
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Sub 1               -------------------------------------------------------------------------------------
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Sub 2           = -------------------------------------------------------------------------------------
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DRE 1           = -------------------------------------------------------------------------------------
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DRE 2           = -------------------------------------------------------------------------------------
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DRE 3           = -------------------------------------------------------------------------------------
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DRE 4               -------------------------------------------------------------------------------------
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PLR-101150-23                                   3



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DRE 5               -------------------------------------------------------------------------------------
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Business A      = -------------------------------------------------------------------------------------
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Business B      = -------------------------------------------------------------------------------------
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Business C      = -------------------------------------------------------------------------------------
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State A         = -------------

State B         = ------------

Country A       = -----------------------

Country B       = --------------

Country C       = ------------

Country D       = ----------------

Continuing      = -------------------------------------------------------------------------------------
Arrangements      -------------------------------------------------------------------------------------
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PLR-101150-23                                           4



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 Overlapping            = -------------------------------------------------------------------------------------
 Director                 ------------------

 a                      = --------

 b                      = --------

 c                      = -----

 Distributing               -------------------------------------------------------------
 Debt

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

This letter responds to a letter from your authorized representatives dated January 6,
2023, requesting rulings on certain federal income tax consequences of a series of
transactions (the “Proposed Transactions”). The material information provided in that
letter and in subsequent correspondence is summarized below.

This letter is issued pursuant to Rev. Proc. 2023-1, 2023-1 I.R.B. 1, Rev. Proc. 2022-10,
2022-6 I.R.B. 473, and Rev. Proc. 2017-52, 2017-41 I.R.B. 283, as amplified and
modified by Rev. Proc. 2018-53, 2018-43 I.R.B. 667, regarding “Covered
Transaction[s]” under section 355 and section 368 of the Internal Revenue Code (the
PLR-101150-23                                  5



“Code”). This office expresses no opinion as to any issue not specifically addressed by
the rulings below.

The rulings contained in this letter are based upon information 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 office has made no determination regarding whether each of the Country B Internal
Spin, the Distributing 2 Internal Spin, the Distributing 3 Internal Spin, the Distributing 4
Internal Split, and the External Spin (each defined below): (i) satisfies the business
purpose requirement of Treas. Reg. § 1.355-2(b); (ii) is used principally as a device for
the distribution of the earnings and profits of the distributing corporation or the controlled
corporation or both (see section 355(a)(1)(B) and Treas. Reg. § 1.355-2(d)); or (iii) is
part of a plan (or series of related transactions) pursuant to which one or more persons
will acquire directly or indirectly stock representing a 50-percent or greater interest in
the distributing corporation or the controlled corporation, or any predecessor or
successor of the distributing corporation or the controlled corporation, within the
meaning of Treas. Reg.§ 1.355-8 (see section 355(e)(2)(A)(ii) and Treas. Reg. § 1.355-
7).

                                    Summary of Facts

Distributing Parent, a publicly traded State A corporation, is the parent of a worldwide
group that includes both domestic and foreign entities. Distributing Parent directly and
indirectly owns corporations, partnerships, and entities disregarded as separate from
their sole regarded owners under Treas. Reg. § 301.7701-3 for U.S. federal income tax
purposes (“DREs”). Distributing Parent and its eligible members join in the filing of a
consolidated U.S. federal income tax return. Distributing Parent’s worldwide group is
engaged in several businesses, including Business A, Business B and Business C.

Immediately prior to the Proposed Transactions, Distributing Parent owns all the issued
and outstanding stock of Sub 2.

Distributing Parent and Sub 2 each own approximately a percent and b percent of the
outstanding stock of Sub 1.

Sub 1 owns all the issued and outstanding stock of Distributing 3, a Country C entity
that is classified as a corporation for US federal income tax purposes.
PLR-101150-23                                  6



Distributing 3 owns (i) all the issued and outstanding stock of Distributing 2, Country A
entity that is classified as a corporation for US federal income tax purposes, and (ii) all
the equity interests in DRE 1.

Distributing 2 owns (i) all the equity interests in DRE 2, (ii) all the issued and
outstanding stock of Distributing 1, and (iii) all the equity interests in DRE 3. Distributing
1 conducts both Business A and Business C.

DRE 2 owns all the equity interests in DRE 4. DRE 4 conducts Business C (“DRE 4
Business C”).

DRE 3 owns all the equity interests in DRE 5. DRE 5 conducts Business A (“DRE 5
Business A”).

For purposes of the active trade or business requirement of section 355(b), (i) with
respect to the Country B Internal Spin (as defined below), Distributing 1 will rely upon
Business C and Controlled 1 will rely upon Business A, as conducted directly and/or by
members of their respective “separate affiliated group” as defined in section
355(b)(3)(B); (ii) with respect to the Distributing 2 Internal Spin (as defined below),
Distributing 2 will rely upon DRE 4 Business C and Controlled 2 will rely upon DRE 5
Business A, as conducted directly and/or by members of their respective “separate
affiliated group” as defined in section 355(b)(3)(B); (iii) with respect to the Distributing 3
Internal Spin (as defined below), Distributing 3 will rely upon DRE 4 Business C and
Controlled 2 will rely upon DRE 5 Business A, as conducted directly and/or by members
of their respective “separate affiliated group” as defined in section 355(b)(3)(B); (iv) with
respect to the Distributing 4 Internal Split (as defined below), Distributing 4 will rely upon
DRE 4 Business C, as conducted directly and/or by members of their respective
“separate affiliated group” as defined in section 355(b)(3)(B); and Controlled 3 will rely
upon DRE 5 Business A conducted directly and/or by members of their respective
“separate affiliated group” as defined in section 355(b)(3)(B); and (v) with respect to the
External Spin (as defined below), Distributing Parent will rely upon DRE 4 Business C,
as conducted directly and/or by members of their respective “separate affiliated group”
as defined in section 355(b)(3)(B); and External Spinco will rely upon DRE 5 Business A
conducted directly and/or by members of their respective “separate affiliated group” as
defined in section 355(b)(3)(B).

Financial information has been submitted in accordance with Revenue Procedure 2017-
52 indicating that, DRE 5 Business A and DRE 4 Business C, and each of Business A
and Business C conducted by Distributing 1, has had gross receipts and operating
expenses representing the active conduct of a trade or business for each of the past
five years.
PLR-101150-23                                  7



                              The Proposed Transactions

Distributing Parent has undertaken a series of preparatory internal transactions in
preparation for the Proposed Transactions. For what are represented to be valid
business reasons, Distributing Parent proposes to engage in the following transactions
(the “Proposed Transactions”) to separate Business A from Business B and distribute
Business A to its public shareholders (the “Public Shareholders”). The relevant steps of
the Proposed Transactions are set forth below:

    1. Distributing 2 will form Controlled 1, a Country B entity and contribute cash to
      Controlled 1 in exchange for newly issued shares of Controlled 1.

    2. Distributing 1 will transfer its Business A assets to Controlled 1 in exchange for
      the cash received in Step 1, which Distributing 1 will distribute to Distributing 2.
      Steps 1 and 2 will occur pursuant to a pre-arranged, legally binding plan such
      that either step will only occur if the other one is also executed.

    3. DRE 3 will file an election under Treas. Reg. § 301.7701-3(c) to be treated as a
      corporation (Controlled 2) for U.S. federal income tax purposes (the “Controlled 2
      Election”).

    4. Distributing 2 will contribute all its Business A assets including any equity it owns
      in Business A subsidiaries to Controlled 2 (the “Distributing 2 Contribution”).

    5. Distributing 2 will distribute all the shares in Controlled 2 to Distributing 3 (the
      “Distributing 2 Distribution,” together with the Controlled 2 Election and the
      Distributing 2 Contribution, the “Distributing 2 Internal Spin”).

    6. Distributing 3 will transfer all the interests in DRE 1 to Controlled 2 in exchange
      for Controlled 2’s shares (the “Distributing 3 Contribution”).

    7. Distributing 3 will distribute Controlled 2 to Sub 1 (the “Distributing 3 Distribution,”
      together with the Distributing 3 Contribution, the “Distributing 3 Internal Spin”).

    8. Distributing Parent and Sub 2 will form Distributing 4 with only cash required
      under State A law to form the entity, if any; and each entity will transfer all its Sub
      1 stock to Distributing 4 in exchange for stock in Distributing 4 equal to the same
      proportionate ownership such entity had in Sub 1 prior to the transfer (the
      “Distributing 4 Formation”).

    9. Sub 1 will convert to a limited liability company under State A law, becoming a
      DRE (“LLC 1,” together with the Distributing 4 Formation, the “Sub 1
      Restructuring”).
PLR-101150-23                                 8




    10. LLC 1 will transfer (i) any Business B assets or employees; and (ii) its equity
       interests in Business B entities to Distributing 4 in redemption of a portion of the
       outstanding LLC 1 interests owned by Distributing 4.

    11. LLC 1 will elect to convert from a State A LLC to a State B corporation, becoming
       Controlled 3 (the “Controlled 3 Contribution”).

    12. Distributing 4 will distribute all the stock in Controlled 3 to Distributing Parent in
       redemption of a portion of the Distributing 4 shares owned by Distributing Parent
       (the “Controlled 3 Distribution,” together with the Controlled 3 Contribution, the
       “Distributing 4 Internal Split”).

    13. Distributing Parent will form External Spinco and transfer its equity interests in
       Controlled 3 to External Spinco (the “External Spinco Contribution”).

    14. External Spinco will borrow new third-party debt (the “Controlled Borrowing”) and
       transfer all or a portion of the proceeds to Distributing Parent (the “Controlled
       Cash Distribution”). The Controlled Cash Distribution will not be required to be
       segregated in a separate bank account or otherwise traced.

    15. Within c days following date of the External Spin (as defined below), Distributing
       Parent will use the entire proceeds received in the Controlled Cash Distribution to
       (i) make distributions to its shareholders, (ii) repurchase shares (which
       repurchases could be made pursuant to its existing employee stock repurchase
       authorization and/or any future authorizations) (such distributions and share
       repurchases, “Shareholder Distributions”), and / or (iii) repay a portion of the
       Distributing Debt.

    16. Distributing Parent will distribute all the stock of External Spinco to its Public
       Shareholders (the “External Spinco Distribution,” together with the External
       Spinco Contribution and the Controlled Cash Distribution, the “External Spin”).

In connection with the Transactions, Distributing Parent and External Spinco (or their
respective affiliates, as applicable) will enter into the Continuing Arrangements.

Following the External Spin a certain individual may serve as a member of the board of
Distributing Parent and External Spinco (i.e., Overlapping Director). Overlapping
Director will not have any special voting rights as a director at either Distributing Parent
or External Spinco: Overlapping Director will have no more than one vote in board
matters (the same as any other director) and thus will constitute no more than a small
minority of each of the boards of directors of the two corporations. There will not be any
obligation for the External Spinco board to nominate Overlapping Member for
PLR-101150-23                                9



subsequent terms as a member of the External Spinco board of directors, and the
length of Overlapping Member’s continued service after the initial terms will be a matter
for the then-current External Spinco’s board to decide.

                                   Representations

The following representations have been made with respect to the Proposed
Transactions:

Country B Internal Spin

Except as otherwise set forth below, Distributing 1 has made all the representations in
section 3 of the Appendix to Rev. Proc. 2017-52 with respect to the Country B Internal
Spin.

Distributing 1 has made the following alternative representations: Representations 3(a);
8(a); 11(a); 15(a); 22(a); 31(a); and 41(a).

Distributing 1 has not made the following representations because they do not apply to
the Country B Internal Spin: Representations 7; 19; 20; 24-25; 35; 36; 38; 39.

Distributing 1 has made the following modified representations:

    1. Representation 32: No intercorporate debt, other than short-term liabilities
      resulting from operations in the ordinary course of business, will exist between
      Distributing 1 and Controlled 1 at the time of, or subsequent to, the Country B
      Distribution (as defined below).

    2. Representation 33: Payments made in connection with all continuing
      transactions, if any, between Distributing 1 and Controlled 1 after the Country B
      Internal Spin will be for fair market value based on arm's-length terms, except for
      the Continuing Arrangements.

    3. Representation 43: For purposes of Treas. Reg. section 1.367(b)-5(c), neither
      Distributing 2’s predistribution amount with respect to Distributing 1 nor
      Distributing’s predistribution amount with respect to Controlled 1 will exceed
      Distributing 2’s postdistribution amount with respect to such entity, or, if the
      predistribution amount does exceed the postdistribution amount, Distributing 2
      will reduce its basis, or include an amount in income as a deemed dividend, to
      the extent provided in Treas. Reg. section 1.367(b)-5(c)(2).

Distributing 2 Internal Spin
PLR-101150-23                                10



Except as otherwise set forth below, Distributing 2 has made all the representations in
section 3 of the Appendix to Rev. Proc. 2017-52 with respect to the Distributing 2
Internal Spin.

Distributing 2 has made the following alternative representations: Representations 3(a);
8(b); 11(a); 15(a); 22(a); 31(a); and 41(a).

Distributing 2 has not made the following representations because they do not apply to
the Distributing 2 Internal Spin: Representations 7; 19; 20; 24-25; 35; 36; 38; 39.

Distributing 2 has made the following modified representations:

    1. Representation 32: No intercorporate debt, other than short-term liabilities
      resulting from operations in the ordinary course of business, will exist between
      Distributing 2 and Controlled 2 at the time of, or subsequent to, the Distributing 2
      Distribution.

    2. Representation 33: Payments made in connection with all continuing
      transactions, if any, between Distributing 2 and Controlled 2 after the Distributing
      2 Internal Spin will be for fair market value based on arm's-length terms, except
      for the Continuing Arrangements.

    3. Representation 43: For purposes of Treas. Reg. section 1.367(b)-5(c), neither
      Distributing 3’s predistribution amount with respect to Distributing 2 nor
      Distributing 3’s predistribution amount with respect to Controlled 2 will exceed
      Distributing 3’s postdistribution amount with respect to such entity, or, if the
      predistribution amount does exceed the postdistribution amount, Distributing 3
      will reduce its basis, or include an amount in income as a deemed dividend, to
      the extent provided in Treas. Reg. section 1.367(b)-5(c)(2).

Distributing 3 Internal Spin

Except as otherwise set forth below, Distributing 3 has made all the representations in
section 3 of the Appendix to Rev. Proc. 2017-52 with respect to the Distributing 3
Internal Spin.

Distributing 3 has made the following alternative representations: Representations 3(a);
8(a); 11(a); 15(a); 22(a); 31(a); and 41(a).

Distributing 3 has not made the following representations because they do not apply to
the Distributing 3 Internal Spin: Representations 7; 19; 20; 24-25; 35; 36; 38; 39.

Distributing 3 has made the following modified representations:
PLR-101150-23                                11




    1. Representation 32: No intercorporate debt, other than short-term liabilities
      resulting from operations in the ordinary course of business, will exist between
      Distributing 3 and Controlled 2 at the time of, or subsequent to, the Distributing 3
      Distribution.

    2. Representation 33: Payments made in connection with all continuing
      transactions, if any, between Distributing 3 and Controlled 2 after the Distributing
      3 Internal Spin will be for fair market value based on arm's-length terms, except
      for the Continuing Arrangements.

    3. Representation 43: For purposes of Treas. Reg. section 1.367(b)-5(c), neither
      Sub 1’s predistribution amount with respect to Distributing 3 nor Sub 1’s
      predistribution amount with respect to Controlled 2 will exceed Sub 1’s
      postdistribution amount with respect to such entity, or, if the predistribution
      amount does exceed the postdistribution amount, Sub 1 will reduce its basis, or
      include an amount in income as a deemed dividend, to the extent provided in
      Treas. Reg. section 1.367(b)-5(c)(2).

Distributing 4 Internal Split

Except as otherwise set forth below, Distributing 4 has made all the representations in
section 3 of the Appendix to Rev. Proc. 2017-52 with respect to the Distributing 4
Internal Split.

Distributing 4 has made the following alternative representations: Representations 3(a);
8(a); 11(a); 15(a); 22(a); 31(a); and 41(a).

Distributing 4 has not made the following representations because they do not apply to
the Distributing 4 Internal Split: Representations 6; 19; 20; 24-25; 35.

Distributing 4 has made the following modified representation:

    1. Representation 32: No intercorporate debt, other than short-term liabilities
      resulting from operations in the ordinary course of business, will exist between
      Distributing 4 and Controlled 3 at the time of, or subsequent to, the Controlled 3
      Distribution.

    2. Representation 33: Payments made in connection with all continuing
      transactions, if any, between Distributing 4 and Controlled 3 after the Distributing
      4 Internal Split will be for fair market value based on arm's-length terms, except
      for the Continuing Arrangements.
PLR-101150-23                                 12



External Spin

Except as otherwise set forth below, Distributing Parent has made all the
representations in section 3 of the Appendix to Rev. Proc. 2017-52 with respect to the
External Spin.

Distributing Parent has made the following alternative representations: Representations
3(a); 11(a); 15(a); 22(a); 31(a); and 41(a).

Distributing Parent has not made the following representations because they do not
apply to the External Spin: Representations 7; 20; 24-25; 40.

Distributing Parent has made the following modified representations:

    1. Representation 8: Other than the proceeds received in the Controlled Cash
      Distribution, Distributing Parent will not distribute External Spinco stock, External
      Spinco securities or other property of External Spinco to any holder of
      Distributing Parent securities in the External Spinco Distribution, in satisfaction
      thereof.

    2. Representation 32: No intercorporate debt, other than short-term liabilities
      resulting from operations in the ordinary course of business, will exist between
      Distributing Parent and External Controlled at the time of, or subsequent to, the
      External Spinco Distribution.

    3. Representation 33: Payments made in connection with all continuing
      transactions, if any, between Distributing Parent and External Spinco after the
      External Spin will be for fair market value based on arm's-length terms, except for
      the Continuing Arrangements.

Except as otherwise set forth below, Distributing Parent has made all the
representations in section 3.04 of Rev. Proc. 2018-53 with respect to the External Spin.

Distributing Parent has made the following modified representation:

    1. Representation 6: There are one or more substantial business reasons for any
      delay in satisfying Distributing Debt from the Controlled Cash Distribution 30
      days after the date of the first distribution of External Spinco stock to the Public
      Shareholders. All the Distributing Debt that will be satisfied with § 361
      Consideration will be satisfied no later than 365 days after such distribution.

Distributing Parent has made the following additional representation:
PLR-101150-23                                13



    1. The Sub 1 Restructuring will qualify as a reorganization under section
      368(a)(1)(F).

                                        Rulings

Based solely upon the information submitted and the representations made, we rule as
follows on the Transactions:

The Country B Internal Spin

    1.    For U.S. federal income tax purposes, Distributing 2 forming Controlled 1 with
         cash followed by Distributing 1 transferring all its Business A assets to
         Controlled 1 in exchange for cash then distributing such cash to Distributing 2
         will together be treated as if (i) Distributing 1 contributed its Business A assets
         to Controlled 1 in exchange for Controlled 1 stock (the “Country B
         Contribution”) and (ii) Distributing 1 subsequently distributed all its Controlled
         1 stock to Distributing 2 (the “Country B Distribution,” together with the
         Country B Contribution, the “Country B Internal Spin”).

    2.    The Country B Internal Spin will qualify as a tax-free reorganization under
         sections 368(a)(1)(D) and 355. Distributing 1 and Controlled 1 will each be a
         “party to a reorganization” within the meaning of section 368(b).

    3.    No gain or loss will be recognized by Distributing 1 upon the Country B
         Contribution (sections 357(a) and 361(a)).

    4.    No gain or loss will be recognized by Controlled 1 upon the Country B
         Contribution (section 1032(a)).

    5.    Controlled 1’s basis in each asset received in the Country B Contribution will
         be equal to the basis of that asset in the hands of Distributing 1 immediately
         before the Country B Contribution (section 362(b)).

    6.    The holding period in each asset received by Controlled 1 in the Country B
         Contribution will include the period during which such asset was held by
         Distributing 1 (section 1223(2)).

    7.    No gain or loss will be recognized by (and no amounts will be included in the
         income of) Distributing 2 upon the receipt of Controlled 1 stock in the Country
         B Distribution (section 355(a)).

    8.    No gain or loss will be recognized by Distributing 1 on its distribution of
         Controlled 1 stock to Distributing 2 (section 361(c)).
PLR-101150-23                                 14




    9.     The aggregate basis of Controlled 1 stock and Distributing 1 stock in the
          hands of Distributing 2 after the Country B Internal Spin will equal the
          aggregate adjusted basis of the Distributing 1 stock held by Distributing 2
          immediately before the Country B Internal Spin, allocated in the manner
          described in Treas. Reg. § 1.358-2(a)(2) (section 358(b)).

    10.    The holding period of the Controlled 1 stock received by Distributing 2 will
          include the holding period of the Distributing 1 stock with respect to which the
          distribution of the Controlled 1 stock was made, provided the Controlled 1
          stock is held as a capital asset on the date of the Country B Internal Spin
          (section 1223(1)).

    11.    Earnings and profits will be allocated between Distributing 1 and Controlled 1
          in accordance with section 312(h) and Treas. Reg. § 1.312-10(a).

The Distributing 2 Internal Spin

    12.    The Distributing 2 Internal Spin will qualify as a tax-free reorganization under
          sections 368(a)(1)(D) and 355. Distributing 2 and Controlled 2 will each be a
          “party to a reorganization” within the meaning of section 368(b).

    13.    No gain or loss will be recognized by Distributing 2 upon the Distributing 2
          Contribution (sections 357(a) and 361(a)).

    14.    No gain or loss will be recognized by Controlled 2 upon the Distributing 2
          Contribution (section 1032(a)).

    15.    Controlled 2’s basis in each asset received in the Distributing 2 Contribution
          will be equal to the basis of that asset in the hands of Distributing 2
          immediately before the Distributing 2 Contribution (section 362(b)).

    16.    The holding period in each asset received by Controlled 2 in the Distributing 2
          Contribution will include the period during which such asset was held by
          Distributing 2 (section 1223(2)).

    17.    No gain or loss will be recognized by (and no amounts will be included in the
          income of) Distributing 3 upon the receipt of Controlled 2 stock in the
          Distributing 2 Distribution (section 355(a)).

    18.    No gain or loss will be recognized by Distributing 2 on its distribution of
          Controlled 2 stock to (section 361(c)).
PLR-101150-23                                 15



    19.    The aggregate basis of Distributing 2 stock and Controlled 2 stock in the
          hands of Distributing 3 after the Distributing 2 Internal Spin will equal the
          aggregate adjusted basis of the Distributing 2 stock held by Distributing 3
          immediately before the Distributing 2 Internal Spin, allocated in the manner
          described in Treas. Reg. § 1.358-2(a)(2) (section 358(b)).

    20.    The holding period of the Controlled 2 stock received by Distributing 3 will
          include the holding period of the Distributing 2 stock with respect to which the
          distribution of the Controlled 2 stock was made, provided the Distributing 2
          stock is held as a capital asset on the date of the Distributing 2 Internal Spin
          (section 1223(1)).

    21.    Earnings and profits will be allocated between Distributing 2 and Controlled 2
          in accordance with section 312(h) and Treas. Reg. § 1.312-10(a).

The Distributing 3 Internal Spin

    22.    The Distributing 3 Internal Spin will qualify as a tax-free reorganization under
          sections 368(a)(1)(D) and 355. Distributing 3 and Controlled 2 will each be a
          “party to a reorganization” within the meaning of section 368(b).

    23.    No gain or loss will be recognized by Distributing 3 upon the Distributing 3
          Contribution (sections 357(a) and 361(a)).

    24.    No gain or loss will be recognized by Controlled 2 upon the Distributing 3
          Contribution (section 1032(a)).

    25.    Controlled 2’s basis in each asset received in the Distributing 3 Contribution
          will be equal to the basis of that asset in the hands of Distributing 3
          immediately before the Distributing 3 Contribution (section 362(b)).

    26.    The holding period in each asset received by Controlled 2 in the Distributing 3
          Contribution will include the period during which such asset was held by
          Distributing 3 (section 1223(2)).

    27.    No gain or loss will be recognized by (and no amount will be included in the
          income of) Sub 1 upon the receipt of Controlled 2 stock in the Distributing 3
          Distribution (section 355(a)).

    28.    No gain or loss will be recognized by Distributing 3 on its distribution of
          Controlled 2 stock to Sub 1 (section 361(c)).
PLR-101150-23                                 16



    29.    The aggregate basis of Distributing 3 stock and Controlled 2 stock in the
          hands of Sub 1 after the Distributing 3 Internal Spin will equal the aggregate
          adjusted basis of the Distributing 3 stock held by Sub 1 immediately before
          the Distributing 3 Internal Spin, allocated in the manner described in Treas.
          Reg. § 1.358-2(a)(2) (section 358(b)).

    30.    The holding period of the Controlled 2 stock received by Sub 1 will include the
          holding period of the Distributing 3 stock with respect to which the distribution
          of the Controlled 2 stock was made, provided the Distributing 3 stock is held
          as a capital asset on the date of the Distributing 3 Internal Spin (section
          1223(1)).

    31.    Earnings and profits will be allocated between Distributing 3 and Controlled 2
          in accordance with section 312(h) and Treas. Reg. § 1.312-10(a).

The Distributing 4 Internal Split

    32.    The Distributing 4 Internal Split will qualify as a tax-free reorganization under
          sections 368(a)(1)(D) and 355. Distributing 4 and Controlled 3 will each be a
          “party to a reorganization” within the meaning of section 368(b).

    33.    No gain or loss will be recognized by Distributing 4 upon the Controlled 3
          Contribution (sections 357(a) and 361(a)).

    34.    No gain or loss will be recognized by Controlled 3 upon the Controlled 3
          Contribution (section 1032(a)).

    35.    Controlled 3’s basis in each asset received in the Controlled 3 Contribution
          will be equal to the basis of that asset in the hands of Distributing 4
          immediately before the LLC 1 Reincorporation (section 362(b)).

    36.    The holding period in each asset received by Controlled 3 in the Controlled 3
          Contribution will include the period during which such asset was held by
          Distributing 4 (section 1223(2)).

    37.    No gain or loss will be recognized by (and no amounts will be included in the
          income of) Distributing Parent upon the receipt of Controlled 3 stock in the
          Controlled 3 Distribution (section 355(a)).

    38.    No gain or loss will be recognized by Distributing 4 on its distribution of
          Controlled 3 stock to Distributing Parent (section 361(c)).
PLR-101150-23                               17



    39.   The basis of the Controlled 3 stock in the hands of Distributing Parent after
         the Distributing 4 Internal Split will equal the basis of Distributing Parent’s
         stock in Distributing 4 redeemed in the Distributing 4 Internal Split, (section
         358(a)(1)).

    40.   The holding period of the Controlled 3 stock received by Distributing Parent
         will include the holding period of the Distributing 4 stock exchanged therefor,
         provided that such Distributing 4 stock is held as a capital asset on the date of
         the Distributing 4 Internal Split (section 1223(1)).

    41.   Earnings and profits will be allocated between Distributing 4 and Controlled 3
         in accordance with section 312(h) and Treas. Reg. §§ 1.312-10(a) and
         1.1502-33.

The External Spin

    42.   The External Spin will qualify as a tax-free reorganization under sections
         368(a)(1)(D) and 355. Distributing Parent and External Spinco will each be a
         “party to a reorganization” within the meaning of section 368(b).

    43.   No gain or loss will be recognized by Distributing Parent upon the External
         Spinco Contribution (sections 357(a) and 361(a)).

    44.   No gain or loss will be recognized by External Spinco upon the External
         Spinco Contribution (section 1032(a)).

    45.   External Spinco’s basis in each asset received in the External Spinco
         Contribution will be equal to the basis of that asset in the hands of Distributing
         Parent immediately before the External Spinco Formation (section 362(b)).

    46.   The holding period in each asset received by External Spinco in the External
         Spinco Contribution will include the period during which such asset was held
         by Distributing Parent (section 1223(2)).

    47.   No gain or loss will be recognized by (and no amounts will be included in the
         income of) the Public Shareholders upon the receipt of External Spinco stock
         in the External Spinco Distribution (section 355(a)).

    48.   No gain or loss will be recognized by Distributing Parent on its distribution of
         External Spinco stock to the Public Shareholders (section 361(c)).

    49.   The aggregate basis of Distributing Parent stock and External Spinco stock in
         the hands of the Public Shareholders after the External Spin will equal the
PLR-101150-23                                  18



          aggregate adjusted basis of the Distributing Parent stock held by the Public
          Shareholders immediately before the External Spin, allocated in the manner
          described in Treas. Reg. § 1.358-2(a)(2) (section 358(b)).

    50.    The holding period of the External Spinco stock received by the Public
          Shareholders will include the holding period of the Distributing Parent stock
          with respect to which the distribution of the External Spinco stock was made,
          provided the Distributing Parent stock is held as a capital asset on the date of
          the External Spin (section 1223(1)).

    51.    Earnings and profits will be allocated between Distributing Parent and
          External Spinco in accordance with section 312(h) and Treas. Reg. §§ 1.312-
          10(a) and 1.1502-33.

    52.    The Controlled Cash Distribution will be treated as being distributed pursuant
          to the External Spin plan of reorganization for purposes of sections
          361(b)(1)(A) and 361(b)(3).

    53.    Payments made between Distributing Parent and External Spinco and their
          respective affiliates under any of the Continuing Arrangements regarding
          liabilities, indemnities, or other obligations, that (i) have arisen or will arise for
          a taxable period ending on or before the External Spin or for a taxable period
          beginning on or before and ending after the External Spin; and (ii) will not
          become fixed and ascertainable until after the External Spin, will be viewed as
          occurring immediately before the External Spin. See Arrowsmith v.
          Commissioner, 344 U.S. 6, 73 (1952); Rev. Rul. 83-73, 1983-1 C.B. 84.

                                          Caveats

Except as expressly provided 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, a taxpayer filing its return electronically may satisfy this requirement by
attaching a statement to its return that sets forth the date and control number of this
letter ruling.
PLR-101150-23                                 19



In accordance with the power of attorney on file with this office, a copy of this ruling
letter is being sent to your authorized representatives.


                                       Sincerely,


                                       _____________________
                                       Mark J. Weiss
                                       Chief, Branch 2
                                       Office of Associate Chief Counsel (Corporate)




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