Debtors’ liquidation plan received another extension while assets and disputed claims are resolved

Plain-English summary

A taxpayer group sought a second supplemental ruling concerning an existing plan to liquidate debtors. It represented that it had continuously pursued liquidation as quickly as commercially reasonable but could not finish disposing of remaining assets and resolving disputed claims within the previously approved period. Debtors that had distributed all assets had already recognized their cancellation-of-debt income, and the group had accounted for that income and related attribute reduction. The IRS ruled that the new facts would not disturb the initial ruling and that the plan would continue to be respected as a liquidation plan for an additional redacted number of years. The extension depends on the earlier representations remaining effective and on continued compliance with the plan and plan trust. The ruling does not address tax issues outside the prior rulings, including other effects of the plan or applicable net operating loss carryforward periods.

Ruling snapshot

• Question: May the debtors’ plan continue to be treated as a plan of liquidation for an additional period?
• Outcome: Approved
• Key authorities: Prior private letter rulings; IRC § 6110(k)(3)

Full text (IRS public release)

Internal Revenue Service Department of the Treasury
Washington, DC 20224

Number: 202515007 Third Party Communication: None
Release Date: 4/11/2025 Date of Communication: Not Applicable
Index Number: 61.22-00, 108.00-00, 331.04-
00, 382.00-00 Person To Contact:
-------------------, ID No. -----------------
-------------------- Telephone Number:
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------------------------------------------ Refer Reply To:
---------------------------------------------- CC:CORP:BO3
------------------------------- PLR-113230-24
Date:
January 13, 2025

LEGEND

Taxpayer = ----------------------------------------------------------------------------------------------
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Date A = -------------------
Date B = -------------------
(j) =

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

This letter (the “Second Supplemental PLR”) responds to your authorized
representative's July 18, 2024, request that we supplement our letter rulings dated Date
A (the “Initial PLR”) and Date B (the “Supplemental PLR”). Capitalized terms not defined
in this ruling have the meanings assigned to them in the Initial PLR.

                                Supplemental Representations

(a) At all times since the issuance of the Initial PLR, Taxpayer has acted with the
    primary purpose of liquidating the Debtors in a commercially reasonable manner
    as quickly as possible under the facts and circumstances.
(b) It is not possible to liquidate the Debtors remaining assets and resolve their
    disputed claims in a commercially reasonable manner within the liquidation
    period contemplated in the Supplemental PLR.

PLR-113230-24 2

(c) The primary purpose of the requested extension is to continue the liquidation of
the Debtors in a commercially reasonable manner as quickly as possible under
the facts and circumstances.
(d) Each Debtor that has distributed all of its assets pursuant to the Plan has
realized any COD income, and the Taxpayer Group has taken such COD income
and any corresponding attribute reduction into account for federal income tax
purposes.

                              Supplemental Rulings

Based on the information submitted and representations made in the Initial PLR, the
Supplemental PLR, and this Second Supplemental PLR, we rule as follows:

(1) The facts and representations in the Second Supplemental PLR will not
adversely affect the Initial PLR, which will remain in full force and effect.
(2) The Plan will continue to be respected as a plan of liquidation for an additional
period of (j) years beyond the period contemplated in the Supplemental PLR.

                             Limitations and Caveats

     The foregoing rulings are based on the following: (1) all representations in the

Initial PLR and Supplemental PLR, except as modified by the Second Supplemental
PLR, remain in full force and effect; and (2) the Taxpayer adheres to all terms and
conditions of the Plan, including the Plan Trust, and the Plan remains in effect. While
this office has not verified any of the material submitted in support of the request for a
ruling, it is subject to verification upon examination.

   No opinion is expressed under the provisions of any other section of the Code or

regulations that are not specifically covered by the above rulings, including the tax
treatment of the Plan or any effects resulting from the Plan under other provisions of the
Code or regulations or the applicability of the relevant net operating loss carryforward
periods.

                              Procedural Statements

   This ruling is directed only to the Taxpayer Group requesting it. Section

6110(k)(3) provides that it may not be used or cited as precedent. In accordance with
the Power of Attorney on file with this office, copies of this letter are being sent to your
authorized representatives.

  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
PLR-113230-24 3

requirement by attaching a statement to their return that provides the date and control
number (PLR-113230-24) of this letter ruling.

                                            Sincerely,


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

cc: ------------------------
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