PLR 201036007: Prior spin-off ruling retroactively revoked

Plain-English summary

The IRS retroactively revoked an earlier private letter ruling that had concluded a proposed spin-off qualified as a tax-free distribution under section 355 and had issued related rulings for the distributing corporation, the controlled corporation, and their shareholders. After issuing the earlier ruling, the taxpayer's representative supplied additional facts about the transaction. The IRS concluded that controlling facts had been misstated or omitted, or that the facts at the time of the transaction materially differed from the facts on which the earlier ruling was based. The earlier ruling therefore no longer applies. The release states that the taxpayer may submit a new ruling request, which would be considered separately and would have to meet the normal requirements for a private letter ruling.

Ruling snapshot

• Question: Should the earlier private letter ruling on the proposed spin-off remain effective after additional transaction facts were supplied?
• Outcome: Revocation
• Key authorities: IRC §§ 355 and 368; Rev. Proc. 2010-1, section 11.05

Full text (IRS public release)

• Internal Revenue Service Department of the Treasury
  Washington, DC 20224

Number: 201036007
Third Party Communication: None
Release Date: 9/10/2010
Date of Communication: Not Applicable
Person To Contact:
Index Number: 355.00-00, 355.01-00, 368.00- -----------------------, ID No. ------------ Telephone Number:
00, 368.04-00
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Refer Reply To:
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CC:CORP:BO1
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PLR-134934-09
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Date:
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June 08, 2010
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TY: ------

LEGEND

Controlled = ----------------------------------------------------------------------------

Distributing = ----------------------------------------------------------

Dear ----------------------:

This letter revokes PLR-134934-09 (March 16, 2010). PLR-134934-09 concluded that a spin-off of Controlled by Distributing to Distributing’s shareholders qualified as a tax-free distribution under §355 of the Internal Revenue Code, and contained other rulings impacting Distributing, Controlled, and Distributing’s shareholders.

The private letter ruling’s conclusions were based on information and representations submitted by your representative. On April 30, 2010, after issuing the prior private letter ruling, your representative provided additional facts pertaining to the transaction that was the subject of the private letter ruling.

As there has been a misstatement or omission of controlling facts and the facts at the time of the transaction are materially different from the controlling facts on which the private letter ruling was based, the Service is retroactively revoking PLR-134934-09. See Section 11.05 of Rev. Proc. 2010-1, 2010-1 I.R.B. 1, 50, which provides that an Associate Office will revoke a letter ruling and apply the revocation retroactively to the taxpayer for whom the private letter ruling was issued if there has been a misstatement or omission or controlling facts or the facts at the time of the transaction are materially different from the facts on which the letter was based.
PLR-134934-09
2

Distributing may file a new request for a private letter ruling in the future. Such a future request will be considered separate from the revoked request. As such, any new request must independently comply with the normal requirements for a private letter ruling.

This ruling is directed only to the taxpayer requesting it. Section 6110(k)(3) of the Code provides that it may not be used or cited as precedent.

In accordance with the Power of Attorney on file with this office, a copy of this letter is being sent to your authorized representative.

Sincerely,

Mark J. Weiss
Assistant Branch Chief, Branch 1
(Corporate)

cc: