Rev. Rul. 70-107

Corporation X owned all of the stock of corporation Y. Pursuant to a plan of reorganization intended to meet the requirements of section 368(a)(1)(C) of the Internal Revenue Code of 1954, Y directly acquired all the assets of corporation Z using voting stock of X previously transferred to it. Part of the liabilities of Z were assumed by Y and part were assumed by X.

Held, in view of the assumption by X of some of Z's liabilities, the exchange does not meet the "solely for voting stock" requirement of section 368(a)(1)(C) of the Code because that section provides in part that in determining whether the exchange is solely for voting stock the assumption by the acquiring corporation of a liability of the other shall be disregarded. Since X (the parent of Y) is not the acquiring corporation, its assumption of Z's liabilities will not be disregarded.