Rev. Proc. 73-17

Section 1. Purpose.

The purpose of this Revenue Procedure is to set forth in a convenient checklist questionnaire the information necessary to be included in a request for a ruling under sections 332 and 334(b)(1) or (b)(2) of the Internal Revenue Code of 1954 relating to complete liquidations of subsidiary corporations.

Sec. 2. Background.

The Internal Revenue Service receives many requests for rulings in which the information furnished as to the proposed transaction is not complete enough to permit a determination to be made. In such cases it is necessary to secure additional facts from the taxpayer before the ruling request can be considered. This procedure is time consuming for both Service personnel and taxpayers and delays issuance of the final ruling letter. This checklist will facilitate the filing of requests for rulings under sections 332 and 334(b)(1) or (b)(2) of the Code by showing specific information which should be included so that the application will be as complete as possible when originally filed. However, since the information necessary to rule on a particular transaction depends upon all the facts and circumstances of that case, information in addition to that suggested in this Revenue Procedure may be required. Nevertheless, careful use of the checklist should avoid needless delay and permit the issuance of rulings in the most expeditious fashion possible.

The authority and general procedures of the National Office of the Service and of the Office of the District Directors of Internal Revenue with respect to the issuance of advance rulings and determination letters are outlined in Rev. Proc. 72-3, 1972-1 C.B. 698. Careful attention to all the requirements of that Revenue Procedure will also serve to minimize needless delays in processing requests for rulings.

Sec. 3. Information to be Included in Requests for Rulings Under Sections 332 and 334(b)(1) or (b)(2) of the Code.

Each of the items included in this section should be specifically dealt with in the application, even though apparent nonapplicability exists. For example, if in 3.02-2(a) the liquidating corporation has no minority shareholders, the application should so state. Presentation of the information required should follow the format of this Revenue Procedure as much as possible. If an item is not applicable the letters "N.A." may be inserted after that section or subsection to so indicate.

.01 Information Regarding the Corporations

1 Names, taxpayer identification numbers, and places and dates of incorporation of the liquidating corporation (subsidiary: S) and distributee corporation (parent: P).

2 Brief descriptions of the businesses of S and P.

3 The location of the District Office that will have audit jurisdiction over the returns of S and P and a statement whether, to the best knowledge of the taxpayer or his representative, the identical issue is being considered by any district office of the Service in connection with an active examination or audit of a tax return already filed or is being considered by a branch office of the Appellate Division. See Revenue Procedure 72-3.

.02 Stock of Subsidiary (Outstanding on Date of Adoption of Plan)

1 Description of each class of stock of S.

2 Ownership.--Shares and percentage of each class owned by:

(a) Minority shareholders.

(b) Parent.--Furnish the following information on these shares:

(1) Information as to when these shares were acquired:

(A) The dates on which acquired.

(B) Option.--If acquired by exercise of an option give the date the option was acquired, the party from whom it was acquired, and the date exercised.

(2) Information as to how these shares were acquired:

(A) The type of transaction (purchase, exchange, etc.) in which acquired and the amount and kind of consideration given.

(B) State whether the basis of the stock in the hands of P is the same, in whole or in part, as the basis in the hands of the party from whom it was acquired.

(C) Ownership Of Stock Of Parent By Selling Shareholder.--At the time acquired, the number of shares of stock of P owned actually and constructively, under the provisions of section 318(a), by each shareholder of S (Selling Shareholder) from whom the stock of S was acquired and the relationship, within the meaning of section 318(a), between P and the Selling Shareholder including the following:

(i) Actual ownership.--The number of shares of stock of P owned actually by each Selling Shareholder.

(ii) Constructive ownership.--In determining stock constructively owned by each Selling Shareholder under 318(a), stock ownership may be attributed any number of times from one individual or entity to another as provided in 318(a)(5)(A). However, observe the exception in 318(a)(5)(B) with respect to so-called "double attribution" among members of the family under 318(a)(1), and the exception in 318(a)(5)(C) with respect to so-called "sidewise" attribution to (under 318(a)(3)), and from (under 318(a)(2)) a partnership, estate, trust or corporation.

Also observe the exceptions to constructive ownership to (under 318(a)(3)) and from (under 318(a)(2)) an employee's trust described in 401(a) which is exempt from tax under 501(a) and to a trust under 318(a)(3) when the beneficiary's interest is a remote contingent interest. If it is contended that a trust is such an employee's trust, or that a beneficiary's interest is a remote contingent interest, submit information to support such contention. (.01) Section 318(a)(1).--When the Selling Shareholder is an individual, the number of shares of stock of P owned actually and constructively under 318(a) by members of the family of the Selling Shareholder described in 318(a)(1).

(.02) Section 318(a)(2).--The number of shares of stock of P owned actually and constructively under 318(a) by any partnership, estate, trust, or corporation in which the Selling Shareholder has an interest and the interest of the Selling Shareholder in each of these entities (including constructive ownership under 318(a) when the Selling Shareholder is a corporation).

(.03) Section 318(a)(3).--The number of shares of stock of P owned actually and constructively under 318(a) by a partner if the Selling Shareholder is a partnership, or by a beneficiary if the Selling Shareholder is a trust or estate, or by the shareholders if the Selling Shareholder is a corporation, without regard to the 50 percent limitation in section 318(a)(3)(C).

(.04) Options to acquire stock of the parent.--Identify the holder of any options (including those in the form of convertible debentures and stock rights or warrants) to acquire stock of P and the relationship, direct or indirect, under 318(a) of the holder of such options to the Selling Shareholder.

(3) State whether P will continue to own all this stock until the final liquidating distribution.

3 Prior Redemptions.--State the number of shares of stock of S, if any, redeemed during the three years preceding the adoption of the plan, the dates of the redemptions, the number of shares of stock of both S and P owned by the redeeming shareholders at the time of the redemptions, and the property distributed in exchange for the stock.

.03 Plan Of Complete Liquidation

1 Dates.

(a) Adoption.--Date of adoption by S and P (see section 1.332-6(a) of the regulations).

(b) Distributions.--Dates of first and final liquidating distributions. If the final distribution will not be made within the taxable year during which the first distribution is made, state when the liquidation will be completed. See section 1.332-4 of the Income Tax Regulations.

2 Status of Liquidation.--State whether S will cease to be a going concern and its activities limited to the winding up of its affairs, paying its debts, and distributing any balance to its shareholders after the first liquidating distribution.

3 Dissolution of Subsidiary

(a) Redemption and Cancellation of All Stock.--State whether all stock will be redeemed and cancelled and S dissolved. If not, give reasons.

(b) Assets Retained.--The amount and kind, if any, and reasons for their retention.

4 Liquidation of Parent.--State whether P will be liquidated in the near future.

.04 Assets of Subsidiary

1 Acquisition.--State whether any assets were acquired in a nontaxable transaction during the three years preceding the adoption of the plan of liquidation (or the acquisition by P of the stock of S whichever is earlier) and give particulars if any have been.

2 Dispositions.

(a) Reincorporation issue.--If any assets have been or will be disposed of by either S or P other than in the ordinary course of business, furnish the following:

(1) Name of acquiring party

(2) Description of the assets

(3) Consideration to be received in exchange

(4) Stock ownership.--If the ultimate acquiring party is a corporation, the shares of stock owned actually and constructively by S or P and its shareholders and the shares of P owned actually and constructively by the acquiring corporation or its shareholders.

(b) To parent other than by liquidation.--Describe any assets, including their bases and fair market values, distributed in kind or sold (other than in the ordinary course of business) by S to P during the three years preceding the date of adoption of the plan of liquidation (or since the acquisition by P of the stock of S if that is later).

3 Income.

(a) Unreported income.--State whether S will report all earned income, as represented by assets that will be distributed to P, such as receivables being reported on a cash basis, unfinished construction contracts, commissions due, etc.

(b) Certain assets and section 334(b)(2).--If the basis of S's assets in the hands of P will be determined under section 334(b)(2), state whether S has a reserve for bad debts, installment obligations, or property described in sections 38, 617(d)(1), 1245, 1250, 1251 or 1252.

.05 Liabilities

1 Solvency.--State whether the fair market value of S's assets will exceed its liabilities (including any amount owed to P) at the date of adoption of the plan of complete liquidation and at the time the first liquidating distribution is made.

2 Intercorporate Indebtedness.--The amount of any debt owed by S to P or by P to S, how and when it was created, the cost and tax basis to the creditor and how the debt will be discharged. If any such debts have been cancelled or otherwise forgiven during the three years preceding the adoption of the plan of liquidation (or since the acquisition by P of the stock of S if that is later), give particulars.

.06 Minority Shareholders

1 Assets.--The amount and kind of assets to be distributed in exchange for their stock.

2 Statutory Merger.--If the basis of S's assets in the hands of P will not be determined under section 334(b)(2) and if the minority shareholders are to receive stock of P, state whether the transaction will constitute a merger under the laws of the applicable states.

.07 Copies of documents to be submitted with request.

1 Balance Sheets.--Latest of S and P.

2 Plan of complete liquidation.

.08 Foreign Corporation.--If P, S, or both are foreign corporations, see also section 367 of the Code and Revenue Procedure 68-23, 1968-1 C.B. 821.

.09 Assumptions or representations, if applicable.

Sec. 4. Inquiries.

Inquiries in regard to this Revenue Procedure should refer to its number and should be addressed to the Assistant Commissioner (Technical), Attention: T:I:R, Internal Revenue Service, Washington, D. C. 20224.