SECTION 2. BACKGROUND

.01 Law .

Section 355(a)(1) provides that, if certain requirements are met, a corporation (Distributing) may distribute (i) stock of a controlled corporation (Controlled) to Distributing’s shareholders, or (ii) Controlled stock and securities to Distributing’s shareholders and security holders, without recognition of gain or loss to, or inclusion of any amount in the income of, the shareholders or security holders.

Section 355(c)(1) provides that no gain or loss is recognized to Distributing upon a distribution of Controlled stock, or stock and securities, to which § 355 (or so much of § 356 as relates to § 355) applies and which is not in pursuance of a plan of reorganization.

In a reorganization under §§ 355 and 368(a)(1)(D) (Divisive Reorganization), Distributing transfers property to Controlled in exchange for consideration (§ 361 Consideration). The § 361 Consideration received by Distributing includes Controlled stock and also may include money, securities or other debt obligations of which Controlled is the obligor, and other property. Controlled also may assume liabilities of Distributing. To complete the Divisive Reorganization, Distributing distributes the Controlled stock, and possibly other § 361 Consideration, to its shareholders and also may distribute § 361 Consideration in satisfaction of its obligations to holders of its securities or to other creditors.

.02 Prior Revenue Procedures .

(1) Rev. Proc. 2017-52 . Rev. Proc. 2017-52 provides procedures for requesting private letter rulings regarding Section 355 Transactions.

(2) Rev. Proc. 2018-53 . Rev. Proc. 2018-53, 2018-43 I.R.B. 667, amplified Rev. Proc. 2017-52 and described the procedures for requesting rulings on issues relating to the assumption or satisfaction of Distributing Debt (as defined therein) in Divisive Reorganizations and the representations, information, and analysis to be submitted in those requests.

(3) Rev. Proc. 2024-24 . Rev. Proc. 2024-24 superseded Rev. Proc. 2018-53 and modified Rev. Proc. 2017-52 by deleting Representations 2, 4, and 17 through 21 in section 3 of the Appendix. Notice 2024-38, which accompanied Rev. Proc. 2024-24, requested feedback on the procedures set forth in Rev. Proc. 2024-24. Notice 2024-38 also described the then-current views and concerns of the Treasury Department and the IRS relating to certain matters addressed in Rev. Proc. 2024-24 and requested feedback on those matters.

.03 This Revenue Procedure .

Section 3 of this revenue procedure restates the guidance originally provided in section 3 of Rev. Proc. 2018-53. Section 4 of this revenue procedure restates the guidance originally provided in Representations 2, 4, and 17 through 21 in section 3 of the Appendix to Rev. Proc. 2017-52.