Rev. Rul. 54-413

Advice is requested with respect to the application of the documentary stamp tax imposed by section 1802(b) of the Internal Revenue Code of 1939 and with respect to exemption from such tax as provided under section 1808(e) of such Code when stock registered in the name of voting trustees in pursuance of a plan of reorganization under section 77 of the Bankruptcy Act, 47 Stat. 1474, as amended, is transferred to the names of the holders of the voting trust certificates.

In the instant case under the plan of reorganization under section 77 of the Bankruptcy Act a new corporation was not formed, the old company becoming the reorganized company. The plan of reorganization provided for the creation of a voting trust in which all stock issued in the reorganization was placed. This stock was registered in the name of the voting trustees and delivered to them in consummation of the plan and for the purposes of the agreement. The court approved the plan and entered its final decree. The voting trust was in effect for 5 years and after termination of the trust the stock was transferred to the names of the holders of the voting trust certificates.

Pursuant to the provisions of section 1802(b) of the Internal Revenue Code a stamp tax is imposed on all sales or transfers of legal title to any of the shares or certificates of each original issue, whether on organization or reorganization.

Section 1808(e) of the Code exempts from the stamp tax the issue, transfer, or exchange of securities which are essential to make effective any plan of reorganization or adjustment confirmed under the Bankruptcy Act if the issue, transfer, or exchange occurs within 5 years from the date of such confirmation or approval.

The plan of reorganization provided for recapitalization and for the creation of a voting trust and all issues, transfers, or exchanges of securities necessary to accomplish the recapitalization and the creation of the voting trust were properly exempt under section 1808(e) of the Code. However, once the objective of the plan of reorganization becomes an accomplished fact, the provisions of section 1808(e) have no application. While the voting trust was provided for and created by the approved reorganization plan, the effectiveness or completion of such plan was in way dependent or contingent upon the termination of the voting trust.

It is held that since the transfer of the stock from the voting trustees to the voting trust certificate holders was not essential to make effective the plan of reorganization, the exemption provided by section 1808(e) of the Code does not apply and the transfer of the stock from the voting trustees to the voting trust certificate holders, regardless of when made, is subject to tax under section 1802(b) of the Code.