IRS written determination 201544020

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: 201544020
Release Date: 10/30/2015
1362.00-00
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Third Party Communication: None
Date of Communication: Not Applicable
Person To Contact:
--------------------------, ID No. ----------------
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Telephone Number:
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Refer Reply To:
CC:PSI:03
PLR-115778-15
Date:
July 21, 2015
Legend
X=------------------------------------------------------------------------------------------------------
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Y=------------------------------------------------------------------------------------------------------
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Z=------------------------------------------------------------------------------------------------------
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State=--------------
D1=----------------------
D2=---------------------------
D3=--------------------
Dear ----------------:
This letter responds to a letter dated May 1, 2015, and subsequent
correspondence, submitted on behalf of X, requesting a ruling under § 1362 of the
Internal Revenue Code that Y and Z will continue to be treated as S corporationsafter
restructuring as described below.
Facts
X was incorporated under Statelaw on D1 and elected to be treated as an S
corporation effective D2. Y and Z were both incorporated under Statelaw on D3 and

PLR-115778-15
2
elected to be treated as S corporations effective D3. X currently has close to 100
shareholders.
The shareholders of X plan to restructure its business by undertaking several
steps, the result of which is that X will become a general partnership under Statelaw,
and Y and Z together will own all of the interests in X (the “Restructuring”). The
shareholders of X will become shareholders in either Y or Z, and Y and Z will be
governed by identical boards of directors pursuant to a voting agreement entered into
by their shareholders. Following the Restructuring, the parties anticipate that both Y
and Z will issue additional shares to new shareholders over time, so thatthe total
number of shareholders in Y and Z together may exceed 100. However, neither Y nor Z
will separately have more than 100 shareholders.
Law and Analysis
Section 1361(b)(1)(A) provides that a “small business corporation” is a domestic
corporation that, among other requirements, does not have more than 100
shareholders.
Section 1362(a)(1) provides that a small business corporation may elect to be an
S corporation.
Rev. Rul. 94-43, 1994-2 CB 199, states that three separate S corporations, each
having the maximum number of shareholders permitted under Subchapter S, may
conduct business through a partnership and continue to be treated as separate S
corporations.
Conclusion
Based on the facts submitted and representations made, we conclude that Y and
Z will continue to meet the requirements of §1361(b)(1)(A) subsequent to the
Restructuring so long as neither Y nor Z exceeds 100 shareholders each.
Except as expressly provided herein, we express or imply no opinion concerning
the federal tax consequences of any aspect of any transaction or item discussed or
referenced in this letter. Specifically, we express or imply no opinion concerning the
federal tax consequences of the various steps of the Restructuring, nor whether Y or Z
are otherwise eligible S corporations for federal tax purposes.
This ruling is directed only to the taxpayer requesting it. Section 6110(k)(3)
provides that it may not be used or cited as precedent.
The ruling contained in this letter is based upon information and representations
submitted by the taxpayer and accompanied by a penalty of perjury statement executed

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by an appropriate party. While this office has not verified any of the material submitted
in support of the ruling request, it is subject to verification on examination.
In accordance with a power of attorney on file with this office, a copy of this letter
is being sent to your authorized representative.
Sincerely,
Richard T. Probst
Senior Technician Reviewer, Branch 3
Office of the Associate Chief Counsel
(Passthroughs and Special Industries)
Enclosures (2):
Copy of this letter
Copy for § 6110 purposes
\cc: