TRANSFERS IN CONNECTION WITH RESTRUCTURING ARE TAX-FREE.

UIL Number(s) 0351.00-00, 0368.03-00, 0368.02-00, 0367.00-00

                                             Date: December 31, 1992

This is in reply to a letter dated and postmarked January 2, 1991, in which rulings were requested as to the federal income tax consequences of a series of consummated transactions. Additional information was submitted in letters dated July 9, August 1, August 12, August 26, October 18, November 21, 1991, and January 8, January 27, May 1, July 31, September 3, November 18, November 24, 1992. The information submitted for consideration is substantially as set forth below.

The rulings contained in this letter are predicated upon facts and representations submitted by the taxpayer and accompanied by a penalty of perjury statement executed by the 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 a part of the audit process. The information submitted for consideration is summarized below.

FCorp A, a Country A corporation, formed in 1981, operates as a b company for most of the L companies located in Region C (collectively referred to as the "Region C Group"). The only stock of FCorp A that is presently outstanding is b shares of voting common stock; A and B, U.S. citizens and residents, each own c shares, and the remaining d shares are owned by C, a non-resident alien. A, B, and C have owned their interest in FCorp A since its formation. C has never resided in the U.S.

FCorp A currently has sixteen wholly-owned non-U.S. subsidiaries (fourteen of which are directly owned), non-majority interests in four affiliated corporations (one of which is directly held), and indirect interests in two partnerships. Thirteen of FCorp A's subsidiaries (eleven of which are directly owned) are engaged in business d, business e, or business f activities throughout Region C. Six of these subsidiaries (five of which are directly owned) are Country A corporations.

FCorp A directly owns the following subsidiaries and affiliates (collectively referred to as "Corporations A-1"), which are engaged in business f activities throughout Region C:

(1) FSub 1, a Country G corporation, which has f shares of stock presently outstanding,

(2) FSub 2, a Country G corporation, which has g shares of stock presently outstanding,

(3) FSub 3, a Country A corporation, which has h shares of stock presently outstanding,

(4) FSub 4, a Country A corporation, which has i shares of stock presently outstanding,

(5) FSub 5, an Country H corporation, which has jj shares of stock presently outstanding, and

(6) FSub 6, a Country I corporation, which has k shares of stock presently outstanding. (FCorp A only owns 1 of those shares; the other outstanding shares are owned by unrelated parties.)

Also, FSub 3 has a wholly owned subsidiary, FSub 7, a Country A corporation, which has b shares outstanding. FSub 5 has two Country H subsidiaries, FSub 8 and FSub 9. FCorp A directly owns all m outstanding preferential shares of FSub 8 and all n outstanding preferential shares of FSub 9. FSub 5 directly owns all o outstanding shares of common stock of FSub 8 and all p outstanding shares of common stock of FSub 9.

FCorp A directly owns the following subsidiaries (collectively referred to as "Corporations A-2"), which are engaged in business d activities throughout Region C:

(1) FSub 10, a Country G Corporation, which has q shares presently outstanding,

(2) FSub 11, a Country J corporation, which has j shares of stock presently outstanding,

(3) FSub 12, a Country A corporation, which has r shares of stock presently outstanding, and

(4) FSub 13, a Country K corporation, which has r shares of stock presently outstanding.

FSub 13 directly owns an interest in the capital and profits of FP 14, a Country K general partnership; the remaining interest is owned by an unrelated party.

FCorp A directly owns the following subsidiaries (collectively referred to as "Corporations A-3"), which are engaged in business e activities throughout Region C:

(1) FSub 16, a Country G corporation, which has g shares of stock presently outstanding,

(2) FSub 17, a Country A corporation, which has s shares of stock presently outstanding, and

(3) FSub 18, a Country A corporation, which has t shares of stock presently outstanding.

FCorp A has one other directly owned subsidiary, FSub 19, a Country K corporation, which has r shares of stock presently outstanding. FSub 19 directly owns pp of the shares of the outstanding stock of Sub 20, a domestic corporation. A owns qq shares of the outstanding stock of Sub 20, and the remainder of the stock of Sub 20 is owned by an unrelated party. Sub 20 directly owns all the outstanding stock of Sub 21, a domestic corporation, which conducts significant operations in the U.S. Sub 21 directly owns all the outstanding stock of Sub 22, a domestic corporation, which conducts activities exclusively in the U.S., and a rr limited interest in the capital and profits of P 23, a domestic limited partnership. P 23 owns many of the L trademarks and tradenames which are licensed outside the U.S. The remaining interests in P 23 are owned directly or indirectly by unrelated and related parties, respectively.

FCorp B, a Country A corporation formed in 1979, engages predominately in business d activities. All of FCorp B's d operations are conducted through a branch, which is maintained in Country M. In addition to its branch activities, FCorp B holds other assets outside of Country M. The only stock of FCorp B that is currently outstanding is v shares of voting common stock; A and B each own w shares, and the remaining x shares are owned by C. A, B, and C have owned their interest in FCorp B for more than 5 years.

FCorp C, a Country A corporation formed in 1974, engages in business d activities, principally in Country A. The only stock that is presently outstanding is aa shares of FCorp C voting common stock; A and B each own bb shares, and the remaining cc shares are owned by C. A, B, and C have owned their interest in FCorp C for more than 5 years.

FCorp C has a wholly-owned Country A subsidiary, FSub 24. FSub 24 is also engaged in business d activities which it conducts in Country A.

FCorp D, formed in 1990, is a Country K subsidiary of FCorp D corporation which will operate as the top-tier holding company of the Region C Group.

FCorp E, formed in 1990, is a Country K subsidiary of FCorp D corporation which will operate as a first-tier holding company for the business f companies of the Region C Group.

FCorp F, formed in 1990, is a Country K subsidiary of FCorp D corporation which will operate as a first-tier holding company for the business d companies of the Region C Group.

FCorp G, formed in 1990, is a Country K subsidiary of FCorp D corporation which will operate as a first-tier holding company for the business e companies of the Region C Group.

FCorp H, formed in 1990, is a Country K subsidiary of FCorp D corporation which will operate as a first-tier holding which will operate as a first-tier company of the Region C Group.

FCorp I, formed in 1990, is a Country K subsidiary of FCorp E corporation which will operate as a second-tier holding company for FSub 5.

FCorp J, formed in 1990, is a Country K subsidiary of FCorp E corporation which will operate as a second-tier holding company for FSub 6.

In order to expand and diversify the existing product lines around the world, FCorp A previously formed FSub 13 to be the Region C Group's joint venturer in FP 14. Prior to Date gg, FCorp A transferred $r to FSub 13 for its r shares of voting common stock. On Date gg, FCorp C transferred $q to FSub 13 for a demand note, and FSub 13 made a capital contribution of $q to FP 14. The other partner in FP 14 has provided $ee as its capital contribution to FP 14. After the transaction described in subparagraphs (iv) through (vi), FP 14 transferred $r to FSub 15 for all of its stock. FSub 13, FP 14, and FSub 15 will not acquire any other assets or stock of FCorp A, FCorp B, and FCorp C.

Management believes that, as a result of combining all of the companies of Region C Group into a single holding company structure, the existing licensing agreements between P 23 and certain business f companies Region C Group as well as the existing buying agreements between Sub 21 (and related L companies) and the business d companies of Region C Group are less desirable from an operational standpoint. Rather, they believe these contracts should be coordinated first through FCorp E and FCorp F, respectively. Therefore, after management implements the entire Plan of Restructuring and obtains P 23's and Sub 21's concurrence, respectively, these agreements will be canceled and new agreements will be executed on terms similar to those of the existing ones.

It has been represented that there are valid business reasons for the following consummated transactions pursuant to the Plan of Restructuring:

        (i) On or about Date hh, A, B, and C transferred a total of

The following representations are made in connection with the transfers by A, B, and C of all of their shares of FCorp B and FCorp C to FCorp F in exchange for FCorp D stock:

(a) The fair market value of the FCorp D stock received by each of A, B, and C was approximately equal to the fair market value of the FCorp B and FCorp C stock, respectively, surrendered by each of A, B, and C in the exchange.

(b) There is no plan or intention by A, B, and C to sell, exchange, or otherwise dispose of a number of shares of FCorp D stock received in the transaction that would reduce their ownership of FCorp D stock to a number of shares having a value, as of the date of the transaction, of less than 50 percent of the value of all of the formerly outstanding stock of FCorp B and FCorp C, respectively, as of the same date. For purposes of this representation, shares of FCorp B stock and FCorp C stock, and shares of FCorp D stock held by A, B, and C or otherwise sold, redeemed, or disposed of prior or subsequent to the transaction will be considered in making this representation.

(c) FCorp B and FCorp C, respectively, have no plan or intention to issue additional shares of its stock that would result in FCorp F losing "control" of FCorp B or FCorp C within the meaning of section 368(c) of the Code.

(d) Prior to the transaction, FCorp D was in "control" of FCorp F within the meaning of section 368(c) of the Code.

(e) FCorp F has no plan or intention to issue additional shares of its stock that would result in FCorp D losing "control" of FCorp F within the meaning of section 368(c) of the Code.

(f) FCorp F has no plan or intention to liquidate FCorp B or FCorp C; to merge FCorp B into another corporation; to cause FCorp B or FCorp C to sell or otherwise dispose of any of its assets, except for dispositions made in the ordinary course of business; or to sell or otherwise dispose of any of the FCorp B stock or FCorp C stock acquired in the transactions, except for transfers described in section 368(a)(2)(C) of the Code.

(g) FCorp D has no plan or intention to reacquire any of its stock issued in the transaction.

(h) FCorp B and FCorp C, respectively, paid or will pay only those expenses of FCorp D and FCorp F that are solely and directly related to the transaction. FCorp B and FCorp C, respectively, paid or will pay the expenses of A, B, and C that are related to these transactions.

(i) FCorp F acquired FCorp B stock and FCorp C stock solely in exchange for FCorp D's voting stock. For purposes of this representation, FCorp B stock or FCorp C stock redeemed for cash or other property furnished by FCorp F is considered as acquired by FCorp F. Further, no liabilities of FCorp B, FCorp C, A, B, or C were assumed by FCorp F, nor was any of the FCorp B stock or FCorp C stock subject to any liabilities.

(j) At the time of the transaction, neither FCorp B nor FCorp C had outstanding any warrants, options, convertible securities, or any other type of right pursuant to which any person could acquire stock in FCorp B or FCorp C that, if exercised or converted, would affect FCorp F's acquisition or retention of control of FCorp B or FCorp C, as defined in section 368(c) of the Code.

(k) FCorp D or FCorp F did not own, directly or indirectly, nor have they owned during the past five years, directly or indirectly, any stock of FCorp B or FCorp C.

(l) FCorp B and FCorp C will each continue its historic business or use a significant portion of its historic business assets in a business.

(m) No two parties to the transaction are investment companies as defined in sections 368(a)(2)(F)(iii) and (iv) of the Code.

(n) There were no dissenters to the transaction.

(o) On the date of the transaction, the fair market value of the assets of FCorp B and of FCorp C, respectively, exceeded the sum of its liabilities plus the liabilities, if any, to which the assets were subject.

(p) FCorp D, FCorp F, FCorp B, and FCorp C are corporations within the meaning of section 7701(a)(3) of the Code.

(q) Neither FCorp B nor FCorp C has been a "controlled foreign corporation" within the meaning of section 957(a) of the Code any time during the last 5 years.

(r) None of the compensation received by any shareholder- employees of FCorp B or FCorp C is separate consideration for, or allocable to, any of their shares of FCorp B stock or FCorp C stock; none of the shares of FCorp D stock received by any shareholder-employees is separate consideration for, or allocable to, any employment agreement; and the compensation paid to any shareholder- employees is for services actually rendered and is commensurate with amounts paid to third parties bargaining at arm's-length for similar services.

The following representations are made with respect to the transfers by A, B, and C of all of their FCorp B and FCorp C stock (including the transfer of $kk), to FCorp D in exchange for FCorp D stock, followed by the respective transfers of the FCorp B and FCorp C stock (including the transfer of $r) by FCorp D to FCorp F in constructive exchange for additional FCorp F stock, as described in subparagraphs (i), (ii), (vi), and (vii), which are also characterized below for purposes of sections 351 and 367 of the Code as a "cascading" section 351 transaction:

(a1) None of the stock transferred is "section 306 stock" within the meaning of section 306(c) of the Code.

(b1) The transfers were not the result of the solicitation by a promoter, broker, or investment house.

(c1) A, B, C, and FCorp D did not retain any rights in the property transferred to FCorp D and FCorp F, respectively.

(d1) There was no indebtedness between A, B, C, and FCorp D and FCorp D and FCorp F, respectively, and there was no indebtedness created in favor of A, B, C, or FCorp D as a result of the transaction.

(e1) The transfers and exchange occurred under a plan agreed upon before the transaction in which the rights of the parties were defined.

(f1) All assets were transferred to FCorp D and FCorp F on Date hh and Date ii.

(g1) There is no plan or intention on the part of FCorp D or FCorp F to redeem or otherwise acquire any of its stock.

(h1) Taking into account any issuance of additional shares of FCorp D and FCorp F stock; any issuance of stock for services; the exercise of any FCorp D or FCorp F stock rights, warrants, or subscriptions; a public offering of FCorp D or FCorp F stock; and the sale, exchange, transfer by gift, or other disposition of any of the stock of FCorp D or FCorp F received in the exchange, A, B, C, and FCorp D will be in "control" of FCorp D and FCorp F, respectively, within the meaning of section 368(c) of the Code.

(i1) A, B, C, and FCorp D, respectively, constructively received stock equal to the fair market value of the property transferred to FCorp D and FCorp F, respectively.

(j1) FCorp D and FCorp F will remain in existence and retain and use the property transferred to them in a trade or business.

(k1) There is no plan or intention by FCorp D or FCorp F to dispose of the transferred property other than in the normal course of business operations.

(l1) Each party paid or will pay all the expenses, if any, incurred in connection with the transaction.

(m1) Neither FCorp D or FCorp F is an investment company within the meaning of section 351(e)(1) of the Code and Reg. section 1.351-1(c)(1)(ii).

(n1) FCorp I is not under the jurisdiction of a court in a title 11 or similar case (within the meaning of section 368(a)(3)(A) of the Code).

(o1) Neither FCorp D or FCorp F is a "personal service corporation" within the meaning of section 269A of the Code.

(p1) FCorp D and FCorp F are corporations within the meaning of section 7701(a)(3) of the Code.

The following representations are made in connection with the transfer and deemed transfer by FCorp D of US cash, the preferential shares of FSub 8 and FSub 9 and the stock of Corporations A-1 to FCorp E:

(a2) No stock or securities were issued for services rendered to or for the benefit of FCorp E in connection with the transaction.

(b2) No stock or securities were issued for indebtedness of FCorp E.

(c2) The transfers were not the result of the solicitation by a promoter, broker, or investment house.

(d2) FCorp D did not retain any rights in the property transferred to FCorp E.

(e2) There was no indebtedness between FCorp E and FCorp D and there was no indebtedness created in favor of FCorp D as a result of the transaction.

(f2) None of the stock transferred is "section 306 stock" within the meaning of section 306(c) of the Code.

(g2) The transfers and exchange occurred under a plan agreed upon before the transaction in which the rights of the parties were defined.

(h2) All assets were transferred to FCorp E on Date hh and Date ii.

(i2) There is no plan or intention on the part of FCorp E to redeem or otherwise reacquire any stock issued in the transaction.

(j2) Taking into account any issuance of additional shares of Fcorp E stock; any issuance of stock for services; the exercise of any Fcorp E stock rights, warrants, or subscriptions; a public offering of FCorp E stock; and the sale, exchange, transfer by gift, or other disposition of any of the stock of FCorp E received in the exchange, FCorp D will be in "control" of Fcorp E within the meaning of section 368(c) of the Code.

(k2) FCorp D received stock approximately equal to the fair market value of the property transferred to FCorp E.

(l2) FCorp E will remain in existence and retain and use the property transferred to it, other than the preferential shares of FSub 8 and FSub 9 and the shares of FSub 5 and FSub-6 stock, in a trade or business. The stock of FSub 6 was transferred to FCorp J as part of the Plan of Restructuring and the preferential shares of FSub 8 and FSub 9 and the shares of stock of FSub 5 were transferred to Fcorp I.

(m2) The preferential shares of FSub 8 and FSub 9 and the shares of FSub 5 and FSub 6 stock were transferred by FCorp E to Fcorp J and FCorp I, as described above, as part of the Plan of Restructuring. There is no plan or intention by Fcorp E to dispose of the remaining transferred property other than in the normal course of business operations.

(n2) FCorp A paid or will pay all the expenses, if any, incurred in connection with the transaction.

(o2) FCorp E is not an investment company within the meaning of section 351(e)(1) of the Code and Reg. section 1.351- 1(c)(1)(ii).

(p2) FCorp D is not under the jurisdiction of a court in a title 11 or similar case (within the meaning of section 368(a)(3)(A) of the Code).

(q2) FCorp E is not a "personal service corporation" within the meaning of section 269A of the Code.

(r2) FCorp E is a corporation within the meaning of section 7701(a)(3) of the Code.

The following representations are made in connection with the transfer and deemed transfer by FCorp D of shares of its stock, US cash, and stock of the Corporations A-2 to FCorp F:

(a3) No stock or securities were issued for services rendered to or for the benefit of FCorp F in connection with the transaction.

(b3) No stock or securities were issued for indebtedness of FCorp F.

(c3) The transfers were not the result of the solicitation by a promoter, broker, or investment house.

(d3) FCorp D did not retain any rights in the property transferred to FCorp F.

(e3) There is no indebtedness between FCorp F and FCorp D and there was no indebtedness created in favor of FCorp D as a result of the transaction.

(f3) None of the stock transferred is "section 306 stock" within the meaning of section 306(c) of the Code.

(g3) The transfers and exchange occurred under a plan agreed upon before the transaction in which the rights of the parties were defined.

(h3) All assets were transferred to FCorp F on Date hh and Date ii.

(i3) There is no plan or intention on the part of FCorp F to redeem or otherwise reacquire any stock that was issued in the transaction.

(j3) Taking into account any issuance of additional shares of FCorp F stock; any issuance of stock for services; the exercise of any FCorp F stock rights, warrants, or subscriptions; a public offering of FCorp F stock; and the sale, exchange, transfer by gift, or other disposition of any of the stock of FCorp F received in the exchange, FCorp D will be in "control" of FCorp F within the meaning of section 368(c) of the Code.

(k3) FCorp D received stock approximately equal to the fair market value of the property transferred to FCorp F.

(l3) FCorp F will remain in existence and retain and use the property transferred to it in a trade or business.

(m3) There is no plan or intention by FCorp F to dispose of the transferred property other than in the normal course of business operations.

(n3) FCorp A, FCorp B, and FCorp C paid or will pay their appropriate share of all the expenses, if any, incurred in connection with the transaction.

(o3) FCorp F is not an investment company within the meaning of section 351(e)(1) of the Code and Reg. section 1.351- 1(c)(1)(ii).

(p3) FCorp D is not under the jurisdiction of a court in a title 11 or similar case (within the meaning of section 368(a)(3)(A) of the Code).

(q3) FCorp F is not a "personal service corporation" within the meaning of section 269A of the Code.

(r3) FCorp F is a corporation within the meaning of section 7701(a)(3) of the Code.

The following representations are made in connection with the transfer and deemed transfer by FCorp D of US cash and stock of the Corporations A-3 to FCorp G:

(a4) No stock or securities were issued for services rendered to or for the benefit of FCorp G in connection with the transaction.

(b4) No stock or securities were issued for indebtedness of FCorp G.

(c4) The transfers were not the result of the solicitation by a promoter, broker, or investment house.

(d4) FCorp D did not retain any rights in the property transferred to FCorp G.

(e4) None of the stock transferred is "section 306 stock" within the meaning of section 306(c) of the Code.

(f4) There was no indebtedness between FCorp G and FCorp D and there was no indebtedness created in favor of FCorp D as a result of the transaction.

(g4) The transfers and exchange occurred under a plan agreed upon before the transaction in which the rights of the parties were defined.

(h4) All assets were transferred to FCorp G on Date hh and Date ii.

(i4) There is no plan or intention on the part of FCorp G to redeem or otherwise reacquire any stock or indebtedness issued in the transaction.

(j4) Taking into account any issuance of additional shares of FCorp G stock; any issuance of stock for services; the exercise of any FCorp G stock rights, warrants, or subscriptions; a public offering of FCorp G stock; and the sale, exchange, transfer by gift, or other disposition of any of the stock of FCorp G received in the exchange, FCorp D will be in "control" of FCorp G within the meaning of section 368(c) of the Code.

(k4) FCorp D received stock approximately equal to the fair market value of the property transferred to FCorp G.

(l4) FCorp G will remain in existence and retain and use the property transferred to it in a trade or business.

(m4) There is no plan or intention by FCorp G to dispose of the transferred property other than in the normal course of business operations.

(n4) FCorp A paid or will pay all the expenses, if any, incurred in connection with the transaction.

(o4) FCorp G is not an investment company within the meaning of section 351(e)(1) of the Code and Reg. section 1.351- 1(c)(1)(ii).

(p4) FCorp D is not under the jurisdiction of a court in a title 11 or similar case (within the meaning of section 368(a)(3)(A) of the Code).

(q4) FCorp G is not a "personal service corporation" within the meaning of section 269A of the Code.

(r4) FCorp G is a corporation with the meaning of section 7701(a)(3) of the Code.

The following representations are made in connection with the transfer by FCorp D of US cash and other assets to FCorp H:

(a5) No stock or securities was issued for services rendered to or for the benefit of FCorp H in connection with the transaction.

(b5) No stock or securities was issued for indebtedness of FCorp H.

(c5) The US cash transferred was not and the other assets transferred will not be the result of the solicitation by a promoter, broker, or investment house.

(d5) FCorp D did not and will not retain any rights in the property transferred to FCorp H.

(e5) There was no indebtedness between FCorp H and FCorp D and there was not and will not be indebtedness created in favor of FCorp D as a result of the transaction.

(f5) The transfers and exchange have occurred or will occur under a plan agreed upon before the transaction in which the rights of the parties were defined.

(g5) The US cash was transferred to FCorp H on Date hh. The remaining assets of FCorp A will be transferred when FCorp A is liquidated under the laws of E.

(h5) There is no plan or intention on the part of FCorp H to redeem or otherwise reacquire any stock issued in the transaction.

(i5) Taking into account any issuance of additional shares of FCorp H stock; any issuance of stock for services; the exercise of any FCorp H stock rights, warrants, or subscriptions; a public offering of FCorp H stock; and the sale, exchange, transfer by gift, or other disposition of any of the stock of FCorp H received in the exchange, FCorp D will be in "control" of FCorp H within the meaning of section 368(c) of the Code.

(j5) FCorp D received stock approximately equal to the fair market value of the property transferred or to be transferred to FCorp H.

(k5) FCorp H will remain in existence and retain and use the property transferred to it in a trade or business.

(l5) There is no plan or intention by FCorp H to dispose of the property transferred or to be transferred other than in the normal course of business operations.

(m5) FCorp A paid or will pay all the expenses, if any, incurred in connection with the transaction.

(n5) FCorp H is not an investment company within the meaning of section 351(e)(1) of the Code and Reg. section 1.351- 1(c)(1)(ii).

(o5) FCorp D is not under the jurisdiction of a court in a title 11 or similar case (within the meaning of section 368(a)(3)(A) of the Code).

(p5) FCorp H is not a "personal service corporation" within the meaning of section 269A of the Code.

(q5) FCorp H is a corporation within the meaning of section 7701(a)(3) of the Code.

The following representations are made in connection with the transfer by FCorp E of US cash and stock of FSub 6 to FCorp J:

(a6) No stock or securities was issued for services rendered to or for the benefit of FCorp J in connection with the transaction.

(b6) No stock or securities was issued for indebtedness of FCorp J.

(c6) The transfers were not the result of the solicitation by a promoter, broker, or investment house.

(d6) FCorp E did not retain any rights in the property transferred to FCorp J.

(e6) There was no indebtedness between FCorp J and FCorp E and there was no indebtedness created in favor of FCorp E as a result of the transaction.

(f6) None of the stock transferred is "section 306 stock" within the meaning of section 306(c) of the Code.

(g6) The transfers and exchange occurred under a plan agreed upon before the transaction in which the rights of the parties were defined.

(h6) All assets were transferred to FCorp J on Date hh and Date ii.

(i6) There is no plan or intention on the part of FCorp J to redeem or otherwise reacquire any stock issued in the transaction.

(j6) Taking into account any issuance of additional shares of FCorp J stock; any issuance of stock for services; the exercise of any FCorp J stock rights, warrants or subscriptions; a public offering of FCorp J stock; and the sale, exchange, transfer by gift, or other disposition of any of the stock of FCorp J received in the exchange, FCorp E will be in "control" of FCorp J within the meaning of section 368(c) of the Code.

(k6) FCorp E received stock approximately equal to the fair market value of the property transferred to FCorp J.

(l6) FCorp J will remain in existence and retain and use the property transferred to it in a trade or business.

(m6) There is no plan or intention by FCorp J to dispose of the transferred property other than in the normal course of business operations.

(n6) FCorp A paid or will pay all the expenses, if any, incurred in connection with the transaction.

(o6) FCorp J is not an investment company within the meaning of section 351(e)(1) of the Code and Reg. section 1.351- 1(c)(1)(ii).

(p6) FCorp E is not under the jurisdiction of a court in a title 11 or similar case (within the meaning of section 368(a)(3)(A) of the Code).

(q6) FCorp J is not a "personal service corporation" within the meaning of section 269A of the Code.

(r6) FCorp J is a corporation within the meaning of section 7701(a)(3) of the Code.

The following representations are made in connection with the transfer and deemed transfer by FCorp E of US cash, the preferential shares of FSub 8 and FSub 9 and the stock of FSub 5 to FCorp I:

(a7) No stock or securities was issued for services rendered to or for the benefit of FCorp I in connection with the proposed transaction.

(b7) No stock or securities was issued for indebtedness of FCorp I.

(c7) None of the stock transferred is "section 306 stock" within the meaning of section 306(c) of the Code.

(d7) The transfers were not the result of the solicitation by a promoter, broker, or investment house.

(e7) FCorp E did not retain any rights in the property transferred to FCorp I.

(f7) There was no indebtedness between FCorp I and FCorp E and there was no indebtedness created in favor of FCorp E as a result of the transaction.

(g7) The transfers and exchange occurred under a plan agreed upon before the transaction in which the rights of the parties were defined.

(h7) All assets were transferred to FCorp I on Date hh and Date ii.

(i7) There is no plan or intention on the part of FCorp I to redeem or otherwise reacquire any stock issued by it in the transaction.

(j7) Taking into account any issuance of additional shares of FCorp I stock; any issuance of stock for services; the exercise of any FCorp I stock rights, warrants, or subscriptions; a public offering of FCorp I stock; and the sale, exchange, transfer by gift, or other disposition of any of the stock of FCorp I received in the exchange, FCorp E will be in "control" of FCorp I within the meaning of section 368(c) of the Code.

(k7) FCorp E received stock approximately equal to the fair market value of the property transferred to FCorp I.

(l7) FCorp I will remain in existence and retain and use the property transferred to it in a trade or business, except for the preferential shares of FSub 8 and FSub 9 which were transferred to FSub 5.

(m7) There is no plan or intention by FCorp I to dispose of the transferred property other than in the normal course of business operations, except for the preferential shares of FSub 8 and FSub 9 which were transferred to FSub 5.

(n7) FCorp A paid or will pay all the expenses, if any, incurred in connection with the transaction.

(o7) FCorp I is not an investment company within the meaning of section 351(e)(1) of the Code and Temp. Reg. section 1.351- 1(c)(1)(ii).

(p7) FCorp E is not under the jurisdiction of a court in a title 11 or similar case (within the meaning of section 368(a)(3)(A) of the Code).

(q7) FCorp I is not a "personal service corporation" within the meaning of section 269A of the Code.

(r7) FCorp I is a corporation within the meaning of section 7701(a)(3) of the Code.

The following representations are made in connection with the transfer by FCorp I of the preferential shares of FSub 8 and FSub 9 to FSub 5:

(a8) None of the stock transferred is "section 306 stock" within the meaning of section 306(c) of the Code.

(b8) The transfers were not the result of the solicitation by a promoter, broker, or investment house.

(c8) FCorp I did not retain any rights in the property transferred to FSub 5.

(d8) There was no indebtedness between FSub 5 and FCorp I and there was no indebtedness created in favor of FCorp I as a result of the transaction.

(e8) The transfers and exchange occurred under a plan agreed upon before the transaction in which the rights of the parties were defined.

(f8) All assets were transferred to FSub 5 on Date ii.

(g8) There is no plan or intention on the part of FSub 5 to redeem or otherwise acquire any of its stock.

(h8) Taking into account any issuance of additional shares of FSub 5 stock; any issuance of stock for services; the exercise of any FSub 5 stock rights, warrants, or subscriptions; a public offering of FSub 5 stock; and the sale, exchange, transfer by gift, or other disposition of any of the stock of FSub 5, FCorp I will be in "control" of FSub 5 within the meaning of section 368(c) of the Code.

(i8) FCorp I constructively received stock equal to the fair market value of the property transferred to FSub 5.

(j8) FSub 5 will remain in existence and retain and use the property transferred to it in a trade or business.

(k8) There is no plan or intention by FSub 5 to dispose of the transferred property other than in the normal course of business operations.

(l8) FCorp A paid or will pay all the expenses, if any, incurred in connection with the transaction.

(m8) FSub 5 is not an investment company within the meaning of section 351(e)(1) of the Code and Reg. section 1.351- 1(c)(1)(ii).

(n8) FCorp I is not under the jurisdiction of a court in a title 11 or similar case (within the meaning of section 368(a)(3)(A) of the Code).

(o8) FSub 5 is not a "personal service corporation" within the meaning of section 269A of the Code.

(p8) FSub 5 is a corporation within the meaning of section 7701(a)(3) of the Code.

The following representations are made in connection with the transfer by FCorp A of all of its assets and liabilities to FCorp D in exchange for FCorp D stock:

(a9) The fair market value of the FCorp D stock received by each of A, B, and C, respectively, is approximately equal to the fair market value of the FCorp A stock surrendered by each A, B, and C in the exchange.

(b9) There is no plan or intention by A, B, and C to sell, exchange, or otherwise dispose of a number of shares of FCorp D stock received in the transaction that would reduce their ownership of FCorp D stock to a number of shares having a value, as of the date of the transaction, of less than 50 percent of the value of all of the formerly outstanding stock of FCorp A as of the same date. For purposes of this representation, shares of FCorp A stock and shares of FCorp D stock held by FCorp A shareholders and otherwise sold, redeemed, or disposed of prior or subsequent to the transaction will be considered in making this representation.

(c9) FCorp D acquired at least 90 percent of the fair market value of the net assets and at least 70 percent of the fair market value of the gross assets held by FCorp A immediately prior to the transaction. For purposes of this representation, amounts used by FCorp A to pay its reorganization expenses and expenses paid by FCorp A for others, and all redemptions and distributions (except for regular, normal dividends) made by FCorp A immediately preceding the transfer are included as assets of FCorp A held immediately prior to the transaction.

(d9) FCorp D has no plan or intention to reacquire any of its stock issued in the transaction.

(e9) There is no plan or intention by FCorp D to sell or otherwise dispose of any of the assets of FCorp A acquired in the transaction, except for dispositions made in the ordinary course of business or transfers described in section 368(a)(2)(C) of the Code.

(f9) Immediately afterwards, FCorp D was in "control" of FCorp E, FCorp F, FCorp G, and FCorp H within the meaning of section 368(c) of the Code.

(g9) FCorp E, FCorp F, FCorp G, and FCorp H have no plan or intention to issue additional shares of their stock that would result in FCorp D losing "control" of any of these corporations within the meaning of section 368(c) of the Code.

(h9) Immediately afterwards, FCorp E was in "control" of FCorp J and FCorp I within the meaning of section 368(c) of the Code.

(i9) FCorp J and FCorp I have no plan or intention to issue additional shares of their stock that would result in FCorp E losing "control" of either corporation within the meaning of section 368(c) of the Code.

(j9) FSub 5 has no plan or intention to issue additional shares of its stock that would result in FCorp I losing "control" of FSub 5 within the meaning of section 368(c) of the Code.

(k9) Immediately afterwards, FCorp I was in "control" of FSub 5 within the meaning of section 368(c) of the Code.

(l9) FCorp A distributed the FCorp D stock it received in the transaction in pursuance of the plan of reorganization.

(m9) As of Date ii, FCorp A had no known existing liabilities (i.e., for US tax purposes) that would have otherwise been assumed by FCorp H pursuant to the plan. As of the same Date, all contingent liabilities (of which none are believed to exist) that materialized afterwards will be assumed by FCorp H pursuant to the plan.

(n9) Following the transaction, FCorp D, FCorp E, FCorp F, FCorp G, FCorp H, FCorp J, and FCorp I will continue the historic business of FCorp A or use a significant portion of FCorp A's historic business assets in a business.

(o9) FCorp A paid or will pay only those expenses of FCorp D, FCorp E, FCorp F, FCorp G, FCorp H, and FCorp J that are solely and directly related to the transaction.

(p9) There was no intercompany indebtedness existing between FCorp A and FCorp D, FCorp E, FCorp F, FCorp G, FCorp H, FCorp J, FCorp I and FSub 5 that was issued, acquired, or was settled at a discount.

(q9) No two parties to the transaction were investment companies as defined in sections 368(a)(2)(F)(iii) and (iv) of the Code.

(r9) FCorp D did not own, directly or indirectly, nor has it owned during the past five years, directly or indirectly, any stock of FCorp A.

(s9) FCorp A is not under the jurisdiction of a court in a Title 11 or similar case within the meaning of section 368(a)(3)(A) of the Code.

(t9) FCorp A has not been a "controlled foreign corporation" within the meaning of section 957(a) of the Code at any time during the last 5 years.

(u9) FCorp D, FCorp A, FCorp E, FCorp F, FCorp G, FCorp H, FCorp J, FCorp I, and FSub 5 are corporations within the meaning of section 7701(a)(3) of the Code.

(v9) There were no dissenters to the transactions.

(w9) None of the compensation received by any shareholder- employees of FCorp A is separate consideration for, or allocable to, any of their shares of FCorp A stock; none of the shares of FCorp D stock received by any shareholder- employees is separate consideration for, or allocable to, any employment agreement; and the compensation paid to any shareholder-employees is for services actually rendered and is commensurate with amounts paid to third parties bargaining at arm's length for similar services.

Based on the information submitted and representations set forth above, and provided (i) FCorp B, FCorp D and FCorp F are corporations within the meaning of section 7701(a)(3) of the Code, (ii) that the requirements of Temp. Reg. section 7.367(b)-1(c) are met, and (iii) that A and B enter into a gain recognition agreement in accordance with Temp. Reg. section 1.367(a)-3T(g), it is held as follows with respect to the transaction described in subparagraph (vi):

(1) The acquisition by FCorp F of all of the outstanding FCorp B voting stock in exchange for FCorp D voting stock qualifies as a parenthetical section 368(a)(1)(B) reorganization. FCorp D, FCorp F, and FCorp B are each "a party to the reorganization" within the meaning of section 368(b).

(2) For Federal income tax purposes, including for purposes of section 367(a), the acquisition by FCorp F of all of the outstanding FCorp B voting stock in exchange for FCorp D voting stock is also treated as a constructive transfer of FCorp B stock to FCorp D and its retransfer by FCorp D to FCorp F in constructive exchange for all of FCorp D and FCorp F's stock, respectively.

(3) Because A and B, the exchanging shareholders in the reorganization, are not United States shareholders (within the meaning of section 7.367(b)-2(b)), A and B are required to include in their gross income the entire amount of gain realized on the exchange of FCorp B voting stock for FCorp D voting stock. Section 7.367(b)-4(b)(1)(ii). However, A and B shall not be required to recognize gain immediately and instead the transaction will be treated as a transfer of property described in section 367(a), notwithstanding section 1.367(a)-3T(b)(1). Section 7.367(b)-4(b)(2)(i).

(4) Under section 367(a), A and B will be required to file a 10- year gain recognition agreement with respect to the FCorp B voting stock, such that if either FCorp D disposes of the stock of FCorp F or if FCorp F disposes of the stock of FCorp B, gain will be triggered under the agreement. See Notice 87-85, 1987-2 C.B. 395, and section 1.367(a)-3T(g). For purposes of section 1.367(a)-3T(g)(3)(iii), the term "substantial portion" shall be defined as "substantially all" (within the meaning of section 368(a)(1)(C)).

(5) No gain or loss is recognized by FCorp D or FCorp F on the receipt of the FCorp B stock solely in exchange for FCorp D's voting stock (Rev. Rul. 57-278, 1957-1 C.B. 124).

(6) FCorp F's basis for the FCorp B stock received in the exchange is the same as the basis of such stock in the hands of A, B, and C immediately prior to the exchange (section 362(b)).

(7) FCorp F's holding period for the FCorp B stock received in the exchange includes, in each instance, A's, B's and C's holding-period in their respective shares of the FCorp B stock (section 1223(2)).

(8) A, B, and C recognized no gain or loss upon the receipt of FCorp D voting stock solely in exchange for their FCorp B stock (section 354(a)(1)).

(9) The basis of FCorp D stock received by A, B, and C in exchange for their FCorp B stock is the same as the basis of FCorp B stock surrendered in exchange therefor (section 358(a)(1)).

(10) The holding period of FCorp D stock received by A, B, and C in the exchange includes the holding period of FCorp B stock surrendered in exchange therefor, provided that FCorp B stock was held as a capital asset in the hands of A, B, and C on the date of the exchange (section 1223(1)).

Based on the facts and representations set forth above and provided (i) that FCorp C is a corporation within the meaning of section 7701(a)(3) of the Code, (ii) that the requirements of Temp. Reg. section 7.367(b)-1(c) are met, and (iii) that A and B enter into a gain recognition agreement in accordance with section 1.367(a)- 3T(g) of the Temp. Regs., it is held as follows with respect to the transaction described in subparagraph (vii):

(11) The acquisition by FCorp F of all of the outstanding FCorp C voting stock in exchange for FCorp D voting stock qualifies as a parenthetical section 368(a)(1)(B) reorganization. FCorp D, FCorp F, and FCorp C are each "a party to the reorganization" within the meaning of section 368(b).

(12) For Federal income tax purposes, including for purposes of section 367(a), the acquisition by FCorp F of all of the outstanding FCorp C voting stock in exchange for FCorp D voting stock is also treated as a constructive transfer of FCorp C stock to FCorp D and its retransfer by FCorp D to FCorp F in constructive exchange for all of FCorp D and FCorp F's stock, respectively.

(13) Because A and B, the exchanging shareholders in the reorganization, are not United States shareholders (within the meaning of section 7.367(b)-2(b)), A and B are required to include in their gross income the entire amount of gain realized on the exchange of FCorp C voting stock for FCorp D voting stock. Section 7.367(b)-4(b)(l)(ii). However, A and B shall not be required to recognize gain immediately and instead the transaction will be treated as a transfer of property described in section 367(a), notwithstanding section 1.367(a)-3T(b)(1). Section 7.367(b)-4(b)(2)(i).

(14) Under section 367(a), A and B will be required to file a 10-year gain recognition agreement with respect to the FCorp C voting stock, such that if either FCorp D disposes of the stock of FCorp F or if FCorp F disposes of the stock of FCorp C, gain will be triggered under the agreement. See Notice 87-85, 1987-2 C.B. 395, and section 1.367(a)-3T(g). For purposes of section 1.367(a)-3T(g)(3)(iii), the term "substantial portion" shall be defined as "substantially all" (within the meaning of section 368(a)(1)(C)).

(15) No gain or loss is recognized by FCorp D or FCorp F on the receipt by FCorp F of the FCorp C stock solely in exchange for FCorp D's voting stock ( Rev. Rul. 57-278).

(16) FCorp F's basis for the FCorp C stock received in the exchange is the same as the basis of such stock in the hands of A, B, and C immediately prior to the exchange (section 362(b)).

(17) FCorp F's holding period for the FCorp C stock received in the exchange includes, in each instance, A's, B's, and C's holding period in their respective shares of the FCorp C stock (section 1223(2)).

(18) A, B, and C recognized no gain or loss upon the receipt of FCorp D voting stock solely in exchange for their FCorp C stock (section 354(a)(1)).

(19) The basis of FCorp D stock received by A, B, and C in exchange for their FCorp C stock is the same as the basis of FCorp C stock surrendered in exchange therefor (section 358(a)(1)).

(20) The holding period of FCorp D stock received by A, B, and C in the exchange includes the holding period of FCorp C stock surrendered in exchange therefor, provided that FCorp C stock was held as a capital asset in the hands of A, B, and C on the date of the exchange (section 1223(1)).

Based on the information submitted and representations set forth above, and provided (i) that FCorp E, FCorp G, FCorp H, FCorp J, FCorp I, and FSub 5 are corporations within the meaning of section 7701(a)(3) of the Code and (ii) that the requirements of Temp. Reg. section 7.367(b)-1(c) are met, it is held as follows with respect to the transactions described in subparagraphs (i), (ii), (iii), (v), (vi), and (vii):

(21) The transfers described in subparagraphs (i) and (ii), and the constructive transfers described in subparagraph (vi) above also will be treated as the transfer by A, B, and C of their FCorp B stock and $kk cash to FCorp D in exchange for FCorp D stock followed by the retransfer of the FCorp B stock and $r cash by FCorp D to FCorp F in constructive exchange for additional FCorp F stock within the meaning of section 351 of the Code (see Rev. Rul. 77-449, 1977-2 C.B. 110 and Rev. Rul. 64-155, 1964-1 (Part 1) C.B. 138).

(22) No gain or loss is recognized by A, B, and C and FCorp D, respectively, upon the constructive transfer of the FCorp B stock and cash to FCorp D and the retransfer by FCorp D to FCorp F, respectively, in constructive exchange for all of FCorp D and FCorp F's stock (section 351(a)).

(23) No gain or loss is recognized by FCorp D and FCorp F, respectively, upon the receipt of the FCorp B stock and cash transferred by A, B, and C and FCorp D, respectively, in constructive exchange for their stock (section 1032(a)).

(24) The basis of the FCorp D and FCorp F stock, respectively, constructively received by A, B, and C and FCorp F, respectively, in the transaction will be the same as the basis of the assets transferred to FCorp D and FCorp F, respectively (section 358(a)).

(25) The basis of the FCorp B stock constructively transferred in the hands of FCorp D and FCorp F, respectively, is the same, in each instance, as the basis of such property in the hands of A, B, and C and FCorp D, respectively, immediately before the transfer (section 362(a)).

(26) The holding period of the stock constructively received by FCorp D and FCorp F, respectively, includes the period during which A, B, C, and FCorp D, respectively, held the assets transferred to FCorp D and FCorp F, respectively, provided that the transferred assets were capital assets on the date of the constructive exchange (section 1223(1)).

(27) The holding period of the FCorp B stock constructively transferred to FCorp D and FCorp F, respectively, in the transaction includes the period during which the stock transferred was held by A, B, C, and FCorp D, respectively (section 1223(2)).

(28) The transfers described in subparagraphs (i) and (ii), and the constructive transfers described in subparagraph (vii) above also will be treated as a transfer by A, B, and C of their FCorp C stock and $r cash to FCorp D in exchange for FCorp D stock followed by the retransfer of the FCorp C stock and $r cash by FCorp D to FCorp F in constructive exchange for additional FCorp F stock within the meaning of section 351 of the Code (see Rev. Rul. 77-449, 1977-2 C.B. 110 and Rev. Rul. 64-155, 1964-1 (Part 1) C.B. 138).

(29) No gain or loss is recognized by A, B, and C and FCorp D, respectively, upon the constructive transfer of the FCorp C stock and cash to FCorp D and the retransfer by FCorp D to FCorp F, respectively, in constructive exchange for all of FCorp D and FCorp F's stock (section 351(a)).

(30) No gain or loss is recognized by FCorp D and FCorp F, respectively, upon the receipt of the FCorp C stock and cash transferred by A, B, and C and FCorp D, respectively, in constructive exchange for their stock (section 1032(a)).

(31) The basis of the FCorp D and FCorp F stock, respectively, constructively received by A, B, and C and FCorp F, respectively, in the transaction will be the same as the basis of the assets transferred to FCorp D and FCorp F, respectively (section 358(a)).

(32) The basis of the FCorp C stock constructively transferred in the hands of FCorp D and FCorp F, respectively, is the same, in each instance, as the basis of such property in the hands of A, B, and C and FCorp D, respectively, immediately before the transfer (section 362(a)).

(33) The holding period of the stock constructively received by FCorp D and FCorp F, respectively, includes the period during which A, B, C, and FCorp D, respectively, held the assets transferred to FCorp D and FCorp F, respectively, provided that the transferred assets were capital assets on the date of the constructive exchange (section 1223(1)).

(34) The holding period of the FCorp C stock constructively transferred to FCorp D and FCorp F, respectively, in the transaction includes the period during which the stock transferred was held by A, B, C, and FCorp D, respectively (section 1223(2)).

(35) No gain or loss is recognized by FCorp D upon the transfer of the property described above to FCorp E in exchange solely for all of FCorp E's stock (section 351(a)).

(36) No gain or loss is recognized to FCorp E upon the receipt of the property transferred to it by FCorp D in exchange for its stock (section 1032(a)).

(37) The basis of the FCorp E stock received by FCorp D in the transaction is the same as the basis of the property transferred to FCorp E (section 358(a)).

(38) The basis of the transferred property in the hands of FCorp E is the same, in each instance, as the basis of such property in the hands of FCorp D immediately before the transfer (section 362(a)).

(39) The holding period of the stock received by FCorp D includes the period during which FCorp D held the assets transferred to FCorp E, provided that the transferred assets were capital assets on the date of the exchange (section 1223(1)).

(40) The holding period of the assets transferred to FCorp E in the transaction includes the period during which the assets transferred were held by FCorp D (section 1223(2)).

(41) No gain or loss is recognized by FCorp D upon the transfer of the property described above to FCorp G in exchange for all of FCorp G's stock (section 351(a)).

(42) No gain or loss is recognized by FCorp G upon the receipt of the property transferred to it by FCorp D in exchange for its stock (section 1032(a)).

(43) The basis of the FCorp G stock received by FCorp D in the transaction will be the same as the basis of the property transferred to FCorp G (section 358(a)).

(44) The basis of the transferred property in the hands of FCorp G is the same, in each instance, as the basis of such property in the hands of FCorp D immediately before the transfer (section 362(a)).

(45) The holding period of the stock received by FCorp D includes the period during which FCorp D held the assets transferred to FCorp G, provided that the transferred assets were capital assets on the date of the exchange (section 1223(1)).

(46) The holding period of the assets transferred to FCorp G in the transaction includes the period during which the assets transferred were held by FCorp D (section 1223(2)).

(47) No gain or loss is recognized by FCorp D upon the transfer of the property described above to FCorp H in exchange for all of FCorp H's stock (sections 351(a)).

(48) No gain or loss is recognized by FCorp H upon the receipt of the property transferred to it by FCorp D in exchange for its stock (section 1032(a)).

(49) The basis of the FCorp H stock received by FCorp D in the transaction is the same as the basis of the property transferred to FCorp H (Section 358(a)).

(50) The basis of the transferred property in the hands of FCorp H is the same, in each instance, as the basis of such property in the hands of FCorp D immediately before the transfer (section 362(a)).

(51) The holding period of the stock received by FCorp D includes the period during which FCorp D held the assets transferred to FCorp H, provided that the transferred assets were capital assets on the date of the exchange (section 1223(1)).

(52) The holding period of the assets transferred to FCorp H in the transaction includes the period during which the assets transferred were held by FCorp D (section 1223(2)).

(53) No gain or loss is recognized by FCorp E upon the transfer of the property described above to FCorp J in exchange for all the stock of FCorp J (section 351(a)).

(54) No gain or loss is recognized by FCorp J upon the receipt of the property transferred to it by FCorp E in exchange for its stock (section 1032(a)).

(55) The basis of the FCorp J stock received by FCorp E in the transaction is the same as the basis of the property transferred to FCorp J (section 358(a)).

(56) The basis of the transferred property in the hands of FCorp J is the same, in each instance, as the basis of such property in the hands of FCorp E immediately before the transfer (section 362(a)).

(57) The holding period of the stock received by FCorp E includes the period during which FCorp E held the assets transferred to FCorp J, provided that the transferred assets were capital assets on the date of the exchange (section 1223(1)).

(58) The holding period of the assets transferred to FCorp J in the transaction includes the period during which the assets transferred were held by FCorp E (section 1223(2)).

(59) No gain or loss is recognized by FCorp E upon the transfer of the property described above to FCorp I in exchange solely for all of FCorp I's stock (section 351(a)).

(60) No gain or loss is recognized by FCorp I upon the receipt of the property transferred to it by FCorp E in exchange for its stock (section 1032(a)).

(61) The basis of the FCorp I stock received by FCorp E in the transaction will be the same as the basis of the property transferred to FCorp I (section 358(a)).

(62) The basis of the transferred property in the hands of FCorp I is the same, in each instance, as the basis of such property in the hands of FCorp E immediately before the transfer (section 362(a)).

(63) The holding period of the stock received by FCorp E includes the period during which FCorp E held the assets transferred to FCorp I, provided that the transferred assets were capital assets on the date of the exchange (section 1223(1)).

(64) The holding period of the assets transferred to FCorp I in the transaction includes the period during which the assets transferred were held by FCorp E (section 1223(2)).

(65) No gain or loss is recognized by FCorp I upon the transfer of the property described above to FSub 5 in constructive exchange solely for stock of FSub 5 (section 351(a)).

(66) No gain or loss is recognized by FSub 5 upon the receipt of the property transferred to it by FCorp I in constructive exchange for its stock (section 1032(a)).

(67) The basis of the FSub 5 stock held by FCorp I will be increased by the basis of the property transferred by FCorp I to FSub 5 (section 358(a)).

(68) The basis of the transferred property in the hands of FSub 5 is the same, in each instance, as the basis of such property in the hands of FCorp I immediately before the transfer (section 362(a)).

(69) The holding period of the stock constructively received by FCorp I includes the period during which FCorp I held the assets transferred to FSub 5, provided that the transferred assets were capital assets on the date of the exchange (section 1223(l)).

(70) The holding period of the assets transferred to FSub 5 in the transaction includes the period during which the assets transferred were held by FCorp I (section 1223(2)).

(71) For purposes of Subchapter C of the Code, the transaction described in subparagraphs (iv) and (v) is treated as a transfer by FCorp A of all of its assets and liabilities to FCorp D in exchange for FCorp D's voting common stock, followed by the pro rata distribution of all of the FCorp D shares by FCorp A to A, B, and C in exchange for FCorp A's outstanding stock. Furthermore, FCorp D is considered to have transferred or will transfer:

(i) US cash, the preferential shares of FSub 8 and FSub 9 and the stock of the Corporations A-1 to FCorp E;

(ii) US cash and stock of the Corporations A-2 to FCorp F;

(iii) US cash and stock of the Corporations A-3 to FCorp G; and

(iv) the remaining assets to FCorp H.

Based on the information submitted and representations set forth above, and provided (i) that FCorp A is a corporation within the meaning of section 7701(a)(3) of the Code and (ii) that for purposes of section 367 of the Code, A and B are each required to meet the notice requirements of Temp. Reg. section 7.367(b)-l(c), but not required to enter into a gain recognition agreement under Temp. Reg. section 1.367(a)-3T(g) or Notice 87-85, 1987-2 C.B. 395, it is held as follows with respect to the transaction described in subparagraph (iv):

(72) The acquisition by FCorp D of substantially all of FCorp A's assets in exchange solely for FCorp D's voting common stock constitutes a reorganization within the meaning of section 368(a)(1)(C) of the Code. For purposes of this ruling, "substantially all" means at least 90 percent of the fair market value of FCorp A's net assets and at least 70 percent of the fair market value of FCorp A's gross assets. The transfer to the first tier subsidiaries of FCorp D of all of FCorp A's assets and liabilities (except for the stock of FSub 19), as described above, will not disqualify the transaction from qualifying under section 368(a)(1)(C) (sections 368(a)(2)(C) and 351(a)); Rev. Rul. 70-224, 1970-1 C.B. 79 and Rev. Rul. 64-73, 1964-1 C.B. 142). FCorp D and FCorp A are each "a party to a reorganization" within the meaning of section 368(b).

(73) No gain or loss is recognized by FCorp A on the transfer of substantially all of its assets to FCorp D solely in exchange for shares of FCorp D voting common stock (section 361(a)).

(74) No gain or loss is recognized by FCorp A on the distribution to A, B, and C of FCorp D stock in connection with the liquidation of FCorp A pursuant to the plan of reorganization (section 361(c)(1)).

(75) No gain or loss is recognized by FCorp D upon the receipt of FCorp A's assets in exchange for FCorp D's voting common stock (section 1032(a)).

(76) The basis of FCorp A's assets in the hands of FCorp D is the same as the basis of such assets in FCorp A's hands immediately prior to the transaction (section 362(b)).

(77) The holding period of FCorp A's assets in the hands of FCorp D includes the holding period of those assets in FCorp A's hands immediately prior to the transaction (section 1223(2)).

(78) No gain or loss is recognized by A, B, and C upon the receipt of FCorp D voting common stock solely in exchange for the FCorp A stock held by each such person (section 354(a)(1)).

(79) The basis of the FCorp D common stock received by A, B, and C is the same as the basis of the FCorp A stock surrendered in exchange thereof (section 358(a)(1)).

(80) The holding period of the FCorp D stock received by A, B, and C will include the holding period of the FCorp A stock surrendered in exchange therefor, provided that such stock was held as a capital asset in the hands of A, B, and C on the date of the exchange (section 1223(1)).

(81) Pursuant to section 381(a) of the Code and section 1.381(a) of the regulations, FCorp D succeeds and takes into account the items of FCorp A described in section 381(c) of the Code. These items will be taken into account by FCorp D subject to the provisions and limitations specified in sections 381, 382(b), 383, and 384 of the Code and the regulations thereunder.

(82) As provided by section 381(c)(2) of the Code and Reg. section 1.381(c)(2)-1, FCorp D succeeds to and takes into account the earnings and profits, or deficit in earnings and profits, of FCorp A as of the date or dates of transfer. Any deficit in earnings and profits of either FCorp D or FCorp A may be used only to offset earnings and profits accumulated after the date or dates of transfer.

(83) The payment of the expenses of A, B, and C by FCorp A, FCorp B, or FCorp C in connection with any transaction, described above or below, will be a dividend distribution to A, B, and C within the meaning of section 301 of the Code.

If the requirements and conditions of paragraphs (c) and (d) of section 7.367(b)-1 of the Temp. Regs. are not complied with, the Commissioner shall make a determination with respect to such noncompliance, based on all the facts and circumstances surrounding the failure to comply. Section 7.367(b)-1(b) of Temp. Regs. and section 367(b)(1) of the Code.

For purposes of the notice requirements of Temp. Regs. sections 1.6038B-1T, 7.367(b)-1(c) and 1.6046-1(c), the transfers described in subparagraphs (i), (iii), (v), (vi), and (vii) will be recast so as to aggregate the transfers described in subparagraphs (i), along with transfers in (vi), and (vii), as a single transfer by A, B, and C to FCorp D within the meaning of section 351, and to also aggregate the transfers described in subparagraphs (ii) and (iii), along with the transfers in (v), (vi), and (vii), as separate cascading transfers by FCorp D to FCorp E, FCorp F, FCorp G, FCorp H, FCorp I, and FCorp J each within the meaning of section 351.

No opinion is expressed with respect to whether any of the foreign corporations is a passive foreign investment company within the meaning of section 1296 of the Code. Furthermore, no opinion is expressed with respect to the effect of sections 1291 through 1297 of the Code on the proposed transaction.

Final regulations pertaining to one or more of the issues addressed in this ruling letter have not yet been adopted. Therefore, this ruling letter will be modified or revoked by adoption of final regulations to the extent that the regulations are inconsistent with any conclusions stated herein. See section 12.03 of Rev. Proc. 92-7, 1992-1 I.R.B. 135, 142. However, when the criteria in section 12.04 of Rev. Proc. 92-7 are satisfied, the revocation or modification of a ruling will not be applied retroactively except in rare or unusual circumstances.

No ruling is requested no opinion is expressed as to the federal income tax effect of the transfer described in subparagraph (xi) above.

No opinion is expressed as to the tax treatment of the transaction under the provisions of any other sections of the Code and the regulations which may be applicable thereto or the tax treatment of any conditions existing at the time of, or effects resulting from the transaction, which are not specifically set forth by the above rulings.

This ruling is directed only to the taxpayer who requested it. Section 6110(j)(3) of the Code provides that it may not be used or cited as precedent.

A copy of this letter should be attached to the federal income tax return of the taxpayers involved for the taxable year in which the transaction covered by this ruling letter is consummated.

Pursuant to a power of attorney on file with this office a copy of this letter ruling is also being sent to your authorized representative.

                                   Sincerely,