Rev. Rul. 64-147

The Internal Revenue Service will follow the decisions of the United States Court of Appeals for the Fifth Circuit in the case of United States v. W. W. Marett, et al. , 325 Fed.(2d) 28 (1963), and of the United States Court of Appeals for the Sixth Circuit in the case of Commissioner v. Edmund P. Coady, et ux. , 289 Fed. (2d) 490 (1961), to the extent they hold that section 1.355-1(a) of the Income Tax Regulations, providing that section 355 of the Internal Revenue Code of 1954 does not apply to the division of a single business, is invalid.

Nonrecognition of gain or loss on distribution occurs only if all other requirements of section 355 of the Code and the regulations thereunder are met.

Consideration is being given to a modification of the regulations.

Revenue Ruling 61-198, C.B. 1961-2, 61, is revoked.

¹ Based on Technical Information Release 564, dated Apr. 3, 1964.