Rev. Rul. 64-155

X , a domestic corporation, proposes to contribute appreciated property to Y , an existing wholly-owned foreign subsidiary. Although X will not receive any additional Y shares, the transaction will be considered an exchange of property for stock described in section 351 of the Internal Revenue Code of 1954. Compare King v. United States , 10 Fed. Supp. 206 (1935), affirmed, 79 Fed. (2d) 453 (1935); Commissioner v. Walter L. Morgan, et ux. , 288 Fed. (2d) 676 (1961), certiorari denied, 368 U.S. 836 (1962). Consequently, section 367 of the Code will be applicable and gain recognized to X corporation to the extent of the appreciation in value of the contributed property unless it is previously established that the proposed transaction is not in pursuance of a plan having as one of its principal purposes the avoidance of Federal income taxes.