IRS PLR: Corporate Business Split Will Qualify for No Gain or Loss Recognition; Related Rulings (IRC §368)

Regarding a corporate group reorganization where the parent (“Distributing”) contributes disregarded entities to a controlled entity in exchange for Controlled stock, which it distributes to shareholders in exchange for Distributing stock — thus separating two businesses — the IRS issued 13 rulings. (1, 2, 3, 6) The contribution and distribution will be an I.R.C. §368(a)(1)(D) reorganization with Distributing and Controlled each a party thereto (§368(b)) not recognizing gain or loss (§361(c), etc.). Upon the contribution: (4) the basis in transferred assets won’t change, and (5) Controlled’s holding period therein will include that of ...