Letter ruling consistent with regs. repealing Bausch & Lomb doctrine.
Letter Ruling 200030015 is in line with recently issued regulations providing that, for transactions after 1999, the Service has abandoned its Bausch & Lomb step-transaction analysis of C reorganizations; see Regs. Sec. 1.3682(d)(4). The Bausch & Lomb doctrine applied when an acquirer with an "old and cold" interest in a target's stock acquired the target's assets in exchange for the acquirer's stock, followed by the target liquidating and distributing the acquirer's stock to the target's share-holders. On the target's liquidation, the acquirer got back a portion of its own stock in exchange for the target's assets, because of its old and cold ownership interest. Under Bausch & Lomb, these transactions would have been combined; the acquirer would have been treated as acquiring a portion of the target's assets in exchange for the acquirer's stock and a portion of the target's assets on liquidation, in exchange for the acquirer's old and cold target stock. Thus, the acquisition would have failed as a C reorganization, because the acquirer would not have acquired substantially all of the target's assets solely in exchange for the acquirer's stock. In Regs. Sec. 1.3682(d)(4), the IRS abandoned its Bausch & Lomb step-transaction position in these situations.
INDU MAGOON, J.D., CPA, AND ANDREW W.. CORDONNIER, CPA, WASHINGTON, DC
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|Title Annotation:||IRS Letter Ruling 200030015|
|Author:||Ciesar, William W.|
|Publication:||The Tax Adviser|
|Date:||Nov 1, 2000|
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