Rev. Proc. 72-13

Section 1. Purpose.

The purpose of this Revenue Procedure is to specify the conditions that must be present before the Internal Revenue Service will consider issuing advance rulings concerning classification of organizations as partnerships, for Federal tax purposes under existing regulations (section 301.7701-3 of the Procedure and Administration Regulations), where they are formed as limited partnerships and a corporation is the sole general partner. The decision whether the organization may be classified as a partnership under existing regulations will depend on all the facts and circumstances.

Sec. 2. Requests for Rulings.

The Service will consider a request for a ruling on the classification of an organization as a partnership where it is formed as a limited partnership and a corporation is the sole general partner under the following conditions:

.01 The limited partners will not own, directly or indirectly, individually or in the aggregate, more than 20 percent of the stock of the corporate general partner or any affiliates as defined in section 1504(a) of the Internal Revenue Code of 1954. For the purpose of determining stock ownership in the corporate general partner or its affiliates the attribution rules set forth in section 318 of the Code are applicable.

.02 If the corporate general partner has an interest in only one limited partnership and the total contributions to that Partnership are less than $2,500,000, the net worth of the corporate general partner at all times will be at least 15 percent of such total contributions or $250,000, whichever is the lesser; if the total contributions to that partnership are $2,500,000 or more, the net worth of the corporate general partner at all times will be at least 10 percent of such total contributions. In computing the net worth of the corporate general partner, for this purpose, its interest in the limited partnership and accounts and notes receivable from and payable to the limited partnership will be excluded.

.03 If the corporate general partner has interests in more than one limited partnership, the net worth requirements explained in the preceding paragraph will be applied separately for each limited partnership, and the corporate general partner will have at all times (exclusive of any interest in any limited partnership and notes and accounts receivable from and payable to any limited partnership in which the corporate general partner has any interest), a net worth at least as great as the sum of the amounts required under .02 above for each separate limited partnership.

.04 For purposes of computing the net worth of the corporate general partner in .02 and .03 above, the current fair market value of the corporate assets must be used.

.05 The purchase of a limited partnership interest by a limited partner does not entail either a mandatory or discretionary purchase or option to purchase any type of security of the corporate general partner or its affiliates.

.06 The organization and operation of the limited partnership must be in accordance with the applicable state statute relating to limited partnerships.

Sec. 3. Instructions.

The general procedures of Revenue Procedure 72-3, page 698, relating to the issuance of rulings and determination letters are applicable to requests relating to classification of organizations as limited partnerships.