IRS written determination 201444007

Private letter rulings and published taxpayer determination letters. Native document type is retained separately; a determination letter is not labeled a private letter ruling. These taxpayer-specific releases cannot be used or cited as precedent under 26 USC 6110(k)(3); applicability and current legal force are not independently certified. Keep repeated UILC subjects attached to one actual numbered document.

Internal Revenue Service
Department of the Treasury
Washington, DC 20224
Number: 201444007
Release Date: 10/31/2014
Index Number: 1362.00-00, 1362.02-00,
1362.02-02, 302.00-00
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Third Party Communication: None
Date of Communication: Not Applicable
Person To Contact:
-----------------, ID No. ----------------
Telephone Number:
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Refer Reply To:
CC:PSI:B02
PLR-105333-14
Date:
May 28, 2014
LEGEND
Corporation=-------------------------------------------
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Business=------------------------------------------------------------
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Continuing Shareholders=--------------------------------------------------
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Minority Shareholder=---------------------------------------------------
State=------------
a=-------
b=-------
Dear --------------:

PLR-105333-14
2
This responds to a letter dated January 29, 2014 submitted on behalf of Corporationby
its authorized representative, requesting a ruling as to the Federal income tax
consequences of a proposed transaction.
The information submitted for consideration is summarized below.
Corporationis a Statecorporation engaged in Business. Corporationis an S
corporation.
The Continuing Shareholdersown a percent of the total shares of Corporation. The
Minority Shareholderowns the remaining b percent of the total shares of Corporation
stock.
In order to increase the operational flexibility of Corporation, and to reducecosts and
eliminate administrative burdens associated with Minority Shareholder, the Continuing
Shareholdersand Corporationpropose the following transaction:
(i) The Continuing Shareholderswill form a new corporation (“Newco”) solely for the
purpose of effecting this transaction.
(ii) Each of the Continuing Shareholderswill contribute all of their shares of Corporation
to Newco in exchange for shares of Newco in equal proportions (the “Contribution”).
(iii) Newco will merge into Corporationwith Corporationsurviving (the “Merger”). In
connection with the Merger, the Minority Shareholderwill receive a specified cash
amount per share in exchange for the Minority Shareholder’s Corporationstock, and
such stock will be cancelled. If the Minority Shareholderobjects to the proposed
transaction, the Minority Shareholderwill have the right to exercise dissenter’s rights
and receive the fair value of Minority Shareholder’s shares. Also in connection with the
Merger, the Newco shares owned by the ContinuingShareholderswill be cancelled and
each will receive shares of Corporationstock in the same proportions as the shares
they held in Newco in exchange for their previously held Newco stock (the “Share
Exchange”).
After the completion of the proposed transaction, each of the Continuing Shareholders
will hold a number of shares in Corporationequal to the proportions that those
Continuing Shareholdersheld immediately before the proposed transaction.
Based solely on the information submitted, we rule as follows:
(1) The creation of Newco followed by the merger of Newco into Corporationwill be
disregarded for Federal income tax purposes. Rev. Rul. 78-250, 1978-1 C.B. 83.

PLR-105333-14
3
(2) The proposed transaction will be treated as if the Continuing Shareholdersnever
transferred their Corporationstock for Federal income tax purposes, and thus the
Continuing Shareholderswill not recognize any gain or loss from the proposed
transaction. Rev. Rul. 78-250, 1978-1 C.B. 83.
(3) The transitory ownership of Corporationby Newco will not cause the termination of
Corporation’s S corporation election under § 1362(d)(2).
(4) The cash received by the Minority Shareholderin the proposed transaction will be
treated as a distribution in redemption of the Minority Shareholder’s stock, subject to the
provisions and limitations of § 302. Rev. Rul. 78-250, 1978-1 C.B. 83.
We express or imply no opinion about the tax treatment of the proposed transaction
under other provisions of the Code and regulations or about the tax treatment of any
conditions existing at the time of, or effects resulting from, the transaction that are not
specifically covered by the above rulings.
This ruling is directed only to the taxpayer who requested it. Section 6110(k)(3) provides
that it may not be used or cited as precedent.
A copy of this letter must be attached to the taxpayer’s federal income tax return for the
taxable year in which the transaction is consummated. 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.
Sincerely,
Melissa Liquerman
Branch Chief, Branch 2
Office of the Associate Chief Counsel
(Passthroughs & Special Industries)
cc: