The IRS issued a revenue ruling (Rev. Rul. 2015-09) on May 5 that addressed
certain corporate step transaction issues and revoked a prior
revenue ruling with similar facts (Rev. Rul. 78-120). The IRS held
that the contribution of the stock of a subsidiary to another
subsidiary, followed by the contributed subsidiary transferring
substantially all of its assets to a lower-tier subsidiary, would
qualify as a Section 351 transaction followed by a reorganization
under Section 368(a)(1)(D) (and not as a "triangular C
reorganization" or some other type of transaction).
In the facts of Rev. Rul. 2015-09, a domestic corporation (P)
owned all the stock of a foreign corporation (S-1), which was an
operating company, and all the stock of a foreign corporation
(S-2), which was a holding company. S-2, in turn, owned all the
stock of three foreign corporations (X, Y and Z), which were
operating companies. In accordance with a merger plan, P, S-1 and
S-2 entered into the following
