Two-stage business spin-off qualified for tax-free treatment

Plain-English summary

A publicly traded foreign parent proposed separating one business from its remaining businesses through two linked transactions involving newly formed foreign corporations. For U.S. tax purposes, each transaction was treated as a contribution of business stock followed by a distribution of the controlled corporation's stock. The IRS ruled that both contribution-and-distribution sequences qualified as Type D reorganizations under Section 368(a)(1)(D) and tax-free distributions under Section 355. The ruling also addressed nonrecognition, carryover basis, holding periods, and the allocation of earnings and profits for the corporations and shareholders involved. The IRS did not rule on the business-purpose, device, or Section 355(e) acquisition-plan requirements, and it expressed no opinion on the preparatory transactions.

Ruling snapshot

• Question: Would two linked contribution-and-distribution transactions qualify as Type D reorganizations and tax-free spin-offs?
• Outcome: approved, subject to stated representations and caveats
• Key authorities: IRC §§ 355, 358, 361, 362, 368(a)(1)(D), 1032, 1223; Treas. Reg. §§ 1.312-10, 1.358-2

Full text (IRS public release)

Internal Revenue Service                                      Department of the Treasury
                                                              Washington, DC 20224

Number: 202419016                                             [Third Party Communication:
Release Date: 5/10/2024                                       Date of Communication: Month DD, YYYY]
Index Number: 368.04-00, 355.00-00
                                                              Person To Contact:
------------------------                                      --------------------, ID No. -----------------
---------------------------------                             Telephone Number:
-------------------------------                               --------------------
---------------------------------------                       Refer Reply To:
-----------------------------                                 CC:CORP:2
                                                              PLR-121713-23
                                                              Date:
                                                              February 9, 2024




Legend

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

Distributing 1           =      ---------------------------------------------------------------------------------
                                ---------------------------------------------------------------------------------
                                -----------------------

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

Controlled 1             =      ---------------------------------------------------------------------------------
                                ---------------------------------------------------------------------------------
                                ------------

Business B               =      ---------------------------------------------------------------------------------
HoldCo                          ---------------------------------------------------------------------------------
                                ------------------------

Remaining                =      ---------------------------------------------------------------------------------
Businesses                      ---------------------------------------------------------------------------------
HoldCo                          -----------------------

FSub 1                   =      ---------------------------------------------------------------------------------
                                ---------------------------------------------------------------------------------
                                ------------------------

PLR-121713-23                               2

FSub 2          =   ---------------------------------------------------------------------------------
                    ---------------------------------------------------------------------------------
                    ------------

FSub 3          =   ---------------------------------------------------------------------------------
                    ---------------------------------------------------------------------------------
                    ------------

Sub 1           =   ---------------------------------------------------------------------------------
                    ---------------------------------------------------------------------------------
                    ------------------------

Sub 2           =   ---------------------------------------------------------------------------------
                    ---------------------------------------------------------------------------------
                    ------------------------

Sub 3           =   ---------------------------------------------------------------------------------
                    ---------------------------------------------------------------------------------
                    ------------------------

Domestic        =   ---------------------------------------------------------------------------------
Business B          ---------------------------------------------------------------------------------
HoldCo              ------------------------

Foreign         =   ---------------------------------------------------------------------------------
Business B          ---------------------------------------------------------------------------------
HoldCo              ------------

FDRE 1          =   ---------------------------------------------------------------------------------
                    ---------------------------------------------------------------------------------
                    ------------

FDRE 2          =   ---------------------------------------------------------------------------------
                    ---------------------------------------------------------------------------------
                    ------------

FDRE 3          =   ---------------------------------------------------------------------------------
                    ---------------------------------------------------------------------------------
                    -----------------------

FDRE 4          =   ---------------------------------------------------------------------------------
                    ---------------------------------------------------------------------------------
                    ------------------------

PLR-121713-23                               3

Trust           =   ---------------------------------------------------------------------------------
                    ---------------------------------------------------------------------------------
                    ------------

LLC             =   --------------------------------

Business A      =   ---------------------------------------------------------------------------------
                    ---------------------------------------------------------------------------------
                    ---------------------------------------------------------------------------------
                    ---------------------------------------------------------------------------------
                    ---------------------------------------------------------------------------------
                    ----------------------------

Business B      =   ---------------------------------------------------------------------------------
                    ---------------------------------------------------------------------------------
                    ---------------------------------------------------------------------------------
                    ---------------------------------------------------------------------------------
                    ---------------------------------------------------------------------------------
                    ------------------------------------

Business C      =   ---------------------------------------------------------------------------------
                    ---------------------------------------------------------------------------------
                    -----------------------------------

Domestic        =   --------------------------------------------------------------------------
Business A

Foreign         =   -------------------------------------------------------------------------------
Business A

Domestic        =   -------------------------------------------------------------------
Business B

Foreign         =   -------------------------------------------------------------------------
Business B

Country A       =   ----------

Country B       =   ------------------

Country C       =   ----------

Country D       =   -----------

Country E       =   -----------------

PLR-121713-23                                         4


 State A                  =   ----------

 State B                  =   -------------

 Domestic                 =   ---------------------------------------------------------------------------------
 Business B                   ---------------------------------------------------------------------------------
 HoldCo                       ------
 Securities

 Historic                 =   ---------------------------------------------------------------------------------
 Distributing                 ---------------------------------------------------------------------------------
 Group Debt                   ----------------

 a                        =   --

 b                        =   ---------------------

 c                        =   --

 d                        =   ---------------------

 Date 1                   =   -------------------




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

This letter responds to your letter dated October 20, 2023, as supplemented by
subsequent information and documentation, requesting rulings on certain U.S. federal
income tax consequences of a series of proposed transactions (collectively, the
“Proposed Transaction”).

This letter is issued pursuant to Rev. Proc. 2017-52, 2017-41 I.R.B. 283, regarding one
or more “Covered Transactions” under sections 355 and 368 of the Internal Revenue
Code (the “Code”). This office expresses no opinion as to any issue not specifically
addressed by the rulings below.

The rulings contained in this letter are based upon information and representations
submitted by the taxpayer and accompanied by a penalties of perjury statement
executed by an appropriate party. This office has not verified any of the materials
submitted in support of the request for rulings. Verification of the information,
representations, and other data may be required as part of the audit process.

PLR-121713-23                                  5

This office has made no determination regarding whether either the Controlled 1
Distribution (as defined below) or the Distribution (as defined below): (i) satisfies the
business purpose requirement of Treas. Reg. § 1.355-2(b); (ii) is used principally as a
device for the distribution of the earnings and profits of the distributing corporation or the
controlled corporation or both (see section 355(a)(1)(B) and Treas. Reg. § 1.355-2(d));
or (iii) is part of a plan (or series of related transactions) pursuant to which one or more
persons will acquire directly or indirectly stock representing a 50-percent or greater
interest in the distributing corporation or the controlled corporation, or any predecessor
or successor of the distributing corporation or the controlled corporation, within the
meaning of Treas. Reg. § 1.355-8 (see section 355(e)(2)(A)(ii) and Treas. Reg. § 1.355-
7).

                                    Summary of Facts

Distributing, a Country A publicly traded corporation, is the ultimate parent of a
worldwide group that includes corporations, partnerships, and entities disregarded for
U.S. federal income tax purposes from the sole regarded owner under Treas. Reg.
§ 301.7701-3 (each, a “DRE”) (collectively, the “Distributing Group”). The Distributing
Group’s business operations consist of Business A, Business B, and Business C
(Business A and Business C are collectively referred to as the “Remaining
Businesses”). The operations associated with Business A are conducted in Country A,
Country B, and Country C. The operations associated with Business B and Business C
are conducted in Country A and Country B.

Distributing has one class of common stock outstanding (the “Distributing Common
Stock”) and a separate series of preferred stock outstanding (the “Distributing Preferred
Stock”).

Distributing owns all of the Distributing 1 common stock (the “Distributing 1 Common
Stock”).

Distributing 1 owns all the stock of (i) Business B HoldCo, a Country A entity classified
as a corporation for U.S. federal income tax purposes (the “Business B HoldCo
Common Stock”), (ii) Remaining Businesses HoldCo, a State A corporation, (iii) FDRE
1, a Country A entity classified as a DRE, and (iv) directly and indirectly, the equity of
corporations, partnerships, and DREs that conduct the Remaining Businesses.

Distributing 1 also owns all the voting trust units of Trust, a Country A trust classified as
a DRE. Trust facilitates third-party financing arrangements for the Distributing Group.

FDRE 1 owns all the stock of FSub 1, a Country A entity classified as a corporation for
U.S. federal income tax purposes. FSub 1 owns all the equity interests of FDRE 2, a
Country A entity classified as a DRE. FDRE 2 owns all the equity interests of FDRE 3,
a Country D LLC classified as a DRE, and FDRE 4, a Country E entity classified as a
DRE.

PLR-121713-23                                 6


Business B HoldCo owns, directly and indirectly, the equity of corporations,
partnerships, and DREs that conduct Business B. Business B HoldCo owns all of (i) the
equity interests of Domestic Business B HoldCo, a State B LLC classified as a
corporation for U.S. federal income tax purposes, (ii) the stock of Foreign Business B
HoldCo, a Country A entity classified as a corporation for U.S. federal income tax
purposes, (iii) the stock of FSub 2, a Country A entity classified as a corporation for U.S.
federal income tax purposes, and (iv) the stock of FSub 3, a Country A entity classified
as a corporation for U.S. federal income tax purposes. Foreign Business B HoldCo,
FSub 2 and FSub 3, own, directly and indirectly, equity interests in partnerships that
conduct the Country A portion of Business B (the “Business B Partnerships”).

Domestic Business B HoldCo is (i) the parent company of a U.S. group of entities that
includes corporations, partnerships, and DREs (collectively, the “Domestic Business B
Group”), and (ii) the common parent of an affiliated group of corporations that files a
consolidated U.S. federal income tax return in accordance with section 1502 (the
“Business B Consolidated Group”). Domestic Business B HoldCo owns all the stock of
Sub 1 and Sub 2, each of which is a State B corporation. The Domestic Business B
Group conducts Domestic Business B.

Sub 2 owns, among other things, all the membership interests of Sub 3, a State B LLC
classified as a corporation for U.S. federal income tax purposes.

For more than five years, the Distributing Group has conducted each of Business A and
Business B. Financial information has been received indicating that Business A and B
have each had gross receipts and operating expenses representing the active conduct
of a trade or business for at least the past five years.

Before Date 1, in transactions unrelated to the Internal Preparatory Transactions and
the Proposed Transaction (described below), Sub 2 and Sub 3 transferred business
assets to a member of the consolidated group engaged in one of the Remaining
Businesses. Sub 2 and Sub 3 recognized losses under section 311 (as modified by
Treas. Reg. § 1.1502-13) as a result of intercompany distributions (the deferred
intercompany transactions or “DITs”).

                           Internal Preparatory Transactions

To facilitate the Proposed Transaction, the Distributing Group executed certain internal
preparatory transactions. Specifically, the Distributing Group undertook a number of
restructuring steps to (i) separate Domestic Business B from the Domestic Remaining
Businesses, and (ii) combine Domestic Business B and Foreign Business B under
Business B HoldCo (collectively, the “Internal Preparatory Transactions”). Among other
transactions, the Internal Preparatory Transactions include the following steps:

PLR-121713-23                                7

        1. Remaining Businesses HoldCo contributed the stock of Sub 1 and Sub 2 to
      newly formed Domestic Business B HoldCo in exchange for (i) Domestic
      Business B HoldCo stock, (ii) the assumption of liabilities, and (iii) the Domestic
      Business B HoldCo Securities.

        2. Remaining Businesses HoldCo transferred the Domestic Business B HoldCo
      Securities to FDRE 3 in repayment of indebtedness in the amount of d.

        3. Remaining Business HoldCo distributed all the stock of Domestic Business B
      HoldCo to Distributing 1.

        4. Distributing 1 contributed its equity interests in the Business B Partnerships to
      newly formed Foreign Business B HoldCo in exchange for debt and equity of
      Foreign Business B HoldCo.

        5. Distributing 1 contributed the following to newly formed Business B HoldCo in
      exchange for all the Business B HoldCo Common Stock: (i) the stock of FSub 2
      and FSub 3, (ii) the stock of Foreign Business B HoldCo, and (iii) the stock of
      Domestic Business B HoldCo.

        6. Prior to Transaction 1 (described below), (i) Domestic Business B HoldCo may
      make a distribution of cash to Business B HoldCo, and, in such case, (ii)
      Business B HoldCo would make a distribution of cash to Distributing 1. Any such
      distributions will be treated as section 301 distributions.

                                Proposed Transaction

For what are represented to be valid corporate business purposes (the “Corporate
Business Purposes”), the Distributing Group proposes to separate Business B from the
Remaining Businesses into Controlled, a separate, newly formed Country A publicly
traded corporation (the “Separation”). Specifically, Distributing proposes to engage in
the following steps to achieve the Separation—i.e., the Proposed Transaction:

        1. FDRE 3 will transfer the Domestic Business B HoldCo Securities to Distributing
      1.

        2. Distributing 1 will use the Domestic Business B HoldCo Securities to repay a
      portion of its third-party debt.

        3. Distributing 1 will file Articles of Amendment to create and authorize the issuance
      of (i) an unlimited number of new shares of Distributing 1 Common Stock, and (ii)
      an unlimited number of Distributing 1 preferred shares. The existing shares of
      Distributing 1 Common Stock held by Distributing will be exchanged for (i) new
      shares of Distributing 1 Common Stock and (ii) Distributing 1 preferred shares

PLR-121713-23                               8

     with a redemption value equal to the value of Business B HoldCo (the
     “Distributing 1 Special Shares”).

    4. Distributing will transfer the Distributing 1 Special Shares to Controlled 1, a newly
     formed Country A corporation, in exchange for all the common stock of
     Controlled 1 (the “Controlled 1 Common Stock”).

    5. Distributing 1 will transfer all of the Business B HoldCo Common Stock to
     Controlled 1 in exchange for Controlled 1 preferred shares with a redemption
     value equal to the value of Business B HoldCo (the “Controlled 1 Special
     Shares”).

    6. Distributing 1 and Controlled 1 will each redeem their respective Special Shares
     in exchange for promissory notes of Distributing 1 and Controlled 1, respectively
     (“Transaction 1 Promissory Notes”), in payment of the redemption price of their
     respective Special Shares.

    7. Transaction 1 Promissory Notes will then be set off against each other and
     cancelled.

     Steps 3 through 7 are collectively referred to as “Transaction 1.”

    8. Under Country A law, Distributing will undergo a reorganization of capital
     whereby the holders of Distributing Common Stock will exchange their existing
     Distributing Common Stock for (i) new shares of Distributing Common Stock and
     (ii) Distributing preferred shares with a redemption value equal to the value of
     Controlled 1 (the “Distributing Special Shares”).

  In addition, under the laws of Country A, the following Steps 9 through 12 will also
  occur.

    9. Holders of Distributing Common Stock will transfer the Distributing Special
     Shares to Controlled, a newly formed Country A corporation, in exchange for all
     the common stock of Controlled (the “Controlled Common Stock”).

    10. Distributing will transfer all of the Controlled 1 Common Stock to Controlled in
      exchange for Controlled preferred shares with a redemption value equal to the
      value of Controlled 1 (the “Controlled Special Shares”).

    11. Distributing and Controlled will each redeem their respective Special Shares in
      exchange for promissory notes of Distributing and Controlled,
      respectively(“Transaction 2 Promissory Notes”), in payment of the redemption
      price of their respective Special Shares.

PLR-121713-23                                9

        12. Transaction 2 Promissory Notes will then be set off against each other and
       cancelled.

       Steps 8 through 12 are collectively referred to as “Transaction 2.”

        13. Foreign Business B HoldCo and Domestic Business B HoldCo, and their
       affiliates, will borrow approximately b from third-party lenders and will use such
       proceeds to repay the Historic Distributing Group Debt. All or a portion of these
       borrowings may occur prior to, or contemporaneous with, the other steps of the
       Proposed Transaction.

In connection with the Proposed Transaction, it is anticipated that Distributing and
Controlled (and their respective affiliates, as applicable) will enter into certain
agreements that will address continuing arrangements between Distributing and
Controlled (and their respective affiliates, as applicable) following the Separation
(collectively, the “Continuing Arrangements”). All of the Continuing Arrangements will
be based on arm’s-length terms and conditions, including arm’s-length pricing, except
with respect to certain payments made pursuant to the transition services agreement
that may be priced on a cost or cost-plus basis for a period not to exceed c years, other
than as required to complete work orders or similar arrangements agreed during the
initial period.

Following the Proposed Transaction, Distributing and Controlled will operate as
independent companies having separate boards of directors.

                                    Representations

Distributing has made the following representations with respect to the Proposed
Transaction.

Transaction 1

With respect to Transaction 1, except as otherwise set forth below, Distributing makes
all of the representations in Section 3 of Appendix A to Rev. Proc. 2017-52. Distributing
makes each of the representations with the understanding that for U.S. federal income
tax purposes, Transaction 1 will be treated as if (i) Distributing 1 contributed all the
Business B HoldCo Common Stock to Controlled 1 in exchange for all the Controlled 1
Common Stock (the “Controlled 1 Contribution”), and (ii) Distributing 1 distributed all the
Controlled 1 Common Stock to Distributing (the “Controlled 1 Distribution”). As such,
the Controlled 1 Contribution and Controlled 1 Distribution should be deemed
transactions for U.S. federal income tax purposes. Therefore, Distributing hereby
modifies all representations it makes in section 3 of the Appendix to Rev. Proc. 2017-52
regarding the Controlled 1 Distribution and Controlled 1 Contribution to include the
language “deemed” where applicable.

PLR-121713-23                                10

Distributing has made the following alternative representations:

      Representations 3(a), 8(b), 11(a), 15(a), 22(a), 31(a), and 41(a).

Distributing has not made the following representations, which do not apply to
Transaction 1:

      Representations 7, 17, 19, 20, 24, 25, 35, 36, 38, 39, and 40.

Distributing has made the following modified representations:

      Representation 32: Except for amounts payable under the Continuing
      Arrangements or liabilities arising in the ordinary course of business, no
      intercorporate debt will exist between Distributing 1 and Controlled 1 (and their
      respective affiliates, as applicable) at the time of, or subsequent to, the
      Controlled 1 Distribution (as defined below).

      Representation 33: Except pursuant to the Continuing Arrangements, payments
      made in connection with all continuing transactions between Distributing 1 and
      Controlled 1 (or their respective affiliates) after the Controlled 1 Distribution (as
      defined below) will be for fair market value based on arm’s-length terms.

Transaction 2

With respect to Transaction 2, except as otherwise set forth below, Distributing makes
all of the representations in Section 3 of Appendix A to Rev. Proc. 2017-52. Distributing
makes each of the representations with the understanding that for U.S. federal income
tax purposes, Transaction 2 will be treated as if (i) Distributing contributed all the
Controlled 1 Common Stock to Controlled in exchange for all the Controlled Common
Stock (the “Contribution”), and (ii) Distributing distributed all the Controlled Common
Stock to the holders of Distributing Common Stock (the “Distribution”). As such, the
Contribution and Distribution should be deemed transactions for U.S. federal income tax
purposes. Therefore, Distributing hereby modifies all representations it makes in
section 3 of the Appendix to Rev. Proc. 2017-52 regarding the Distribution and
Contribution to include the language “deemed” where applicable.

Distributing has made the following alternative representations:

Representations 3(a), 8(a), 11(a), 15(a), 22(a), 31(a), and 41(a).

Distributing has not made the following representations, which do not apply to
Transaction 2:

PLR-121713-23                                11

      Representations 7, 17, 19, 20, 24, 25, 35, 36, 38, 39, and 40.

Distributing has made the following modified representations:

      Representation 32: Except for amounts payable under the Continuing
      Arrangements or liabilities arising in the ordinary course of business, no
      intercorporate debt will exist between Distributing and Controlled (and their
      respective affiliates, as applicable) at the time of, or subsequent to, the
      Distribution (as defined below).

      Representation 33: Except pursuant to the Continuing Arrangements, payments
      made in connection with all continuing transactions between Distributing and
      Controlled (or their respective affiliates) after the Distribution (as defined below)
      will be for fair market value based on arm’s-length terms.

      Representation 37: Except for the DITs, there is no loss subject to Treas. Reg.
      § 1.1502-13 that will be taken into account as a result of a transaction related to
      the distribution.

                                         Rulings

Based solely on the information submitted and the representations made, we rule as
follows with respect to the Proposed Transaction:

Transaction 1

        1. For U.S. federal income tax purposes, Transaction 1 will be treated as if (i)
      Distributing 1 contributed all the Business B HoldCo Common Stock to Controlled
      1 in exchange for all the Controlled 1 Common Stock (i.e., the Controlled 1
      Contribution), and (ii) Distributing 1 distributed all the Controlled 1 Common
      Stock to Distributing (i.e., the Controlled 1 Distribution) (Rev. Rul. 77-191, 1971-1
      C.B. 94; Rev. Rul. 57-311, 1957-2 C.B. 243).

        2. The Controlled 1 Contribution, together with the Controlled 1 Distribution, will be
      a reorganization under section 368(a)(1)(D). Distributing 1 and Controlled 1 will
      each be a “party to a reorganization” within the meaning of section 368(b).

        3. No gain or loss will be recognized by Distributing 1 in the Controlled 1
      Contribution (section 361(a)).

        4. No gain or loss will be recognized by Controlled 1 in the Controlled 1 Contribution
      (section 1032(a)).

PLR-121713-23                                12

        5. The basis in each asset received by Controlled 1 in the Controlled 1 Contribution
      will be the same as the basis of that asset in the hands of Distributing 1
      immediately before the Controlled 1 Contribution (section 362(b)).

        6. The holding period in each asset received by Controlled 1 in the Controlled 1
      Contribution will include the period during which Distributing 1 held that asset
      (section 1223(2)).

        7. Distributing will recognize no gain or loss (and no amount will be includible in
      income) upon the receipt of Controlled 1 stock in the Controlled 1 Distribution
      (section 355(a)).

        8. Distributing 1 will recognize no gain or loss upon the Controlled 1 Distribution
      (section 361(c)).

        9. The holding period of the Controlled 1 Common Stock received by Distributing in
      the Controlled 1 Distribution will include the holding period of the Distributing 1
      Common Stock with respect to which the distribution of Controlled 1 Common
      Stock will be made in the case of the Controlled 1 Distribution, provided that the
      Distributing 1 Common Stock is held as a capital asset on the date of the
      distribution (section 1223(1)).

        10. Earnings and profits, if any, will be allocated between Distributing 1 and
       Controlled 1 in accordance with section 312(h) and Treas. Reg. § 1.312-10(a).

Transaction 2

        11. For U.S. federal income tax purposes, Transaction 2 will be treated as if (i)
       Distributing contributed all the Controlled 1 Common Stock to Controlled in
       exchange for all the Controlled Common Stock (i.e., the Contribution), and (ii)
       Distributing distributed all the Controlled Common Stock to the holders of
       Distributing Common Stock (i.e., the Distribution) (Rev. Rul. 77-191, 1971-1 C.B.
       94; Rev. Rul. 57-311, 1957-2 C.B. 243).

        12. The Contribution, together with the Distribution, will be a reorganization under
       section 368(a)(1)(D). Distributing and Controlled will each be a “party to a
       reorganization” within the meaning of section 368(b).

        13. No gain or loss will be recognized by Distributing in the Contribution (section
       361(a)).

        14. No gain or loss will be recognized by Controlled in the Contribution (section
       1032(a)).

PLR-121713-23                                 13

        15. The basis in each asset received by Controlled in the Contribution will be the
       same as the basis of that asset in the hands of Distributing immediately before
       the Contribution (section 362(b)).

        16. The holding period in each asset received by Controlled in the Contribution will
       include the period during which Distributing held that asset (section 1223(2)).

        17. Holders of Distributing Common Stock will recognize no gain or loss (and no
       amount will be includible in income) upon receipt of Controlled Common Stock in
       the Distribution (section 355(a)).

        18. Distributing will recognize no gain or loss upon the Distribution (section 361(c)).

        19. The aggregate basis of the Distributing Common Stock and the Controlled
       Common Stock in the hands of the holders of Distributing Common Stock
       immediately after the Distribution will be the same as the aggregate basis of the
       Distributing Common Stock held by holders of Distributing Common Stock
       immediately before the Distribution allocated between Distributing Common
       Stock and Controlled Common Stock in proportion to the fair market value of
       each immediately following the Distribution (Treas. Reg. § 1.358-2(a)(2); section
       358(b)(2) and (c)).

        20. The holding period of the Controlled Common Stock received by the Distributing
       shareholders in the Distribution will include the holding period of the Distributing
       Common Stock with respect to which the distribution of Controlled Common
       Stock will be made in the case of the Distribution, provided that the Distributing
       Common Stock is held as a capital asset on the date of the distribution (section
       1223(1)).

        21. Earnings and profits, if any, will be allocated between Distributing and Controlled
       in accordance with section 312(h) and Treas. Reg. § 1.312-10(a).

                                         Caveats

Except as expressly provided herein, no opinion is expressed or implied concerning the
tax treatment of the Proposed Transaction under any provision of the Code and
regulations or the tax treatment of any condition existing at the time of, or effects
resulting from, the Proposed Transaction that is not specifically covered by the above
rulings. In addition, no opinion is expressed or implied concerning the tax treatment of
the Internal Preparatory Transactions including the distribution of the stock or securities
of Domestic Business B HoldCo (as well as any subsequent transfers of such
securities).

PLR-121713-23                                             14

                                          Procedural Statements

The 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.

A copy of this letter must be attached to any income tax return to which it is relevant.
Alternatively, taxpayers filing their returns electronically may satisfy this requirement by
attaching a statement to their returns that provides the date on and control number
(PLR-121713-23) of the letter ruling.

Pursuant to a Power of Attorney on file with this office, a copy of this letter is being sent
to your authorized representatives.

                                                 Sincerely,



                                                 Gerald B. Fleming
                                                 Senior Technician Reviewer, Branch 2
                                                 (Corporate)


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