Internal Revenue Service
Revenue Ruling

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 Rev. Rul. 67-100

1967-1 C.B. 76

Sec. 341

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Rev. Rul. 67-100

Taxpayer, the owner of stock in a corporation which is collapsible under the terms of section 341(b)(1) of the Internal Revenue Code of 1954, entered into an executory contract of sale of the stock of the collapsible corporation on January 10, 1967. The contract provided in part that the transaction will be closed on July 2, 1967, at which time the stock certificates will be transferred to the purchaser, and that an appropriate adjustment in the purchase price will be made for any material changes in the agreed amount of the underlying assets and liabilities of the corporation occurring between the date the contract was entered into and the date of closing. The contract also indicated that all of the other benefits and burdens of ownership will remain with the seller until closing. On the date the executory contract was entered into, the three-year limitation of section 341(d)(3) of the Code had not run; however, the three year limitation will have run by July 2, the date of closing.

Held , that since the gain on the transaction will be realized when the transaction is closed and not when the executory contract of sale was entered into, the taxpayer is not precluded from the application of section 341(d)(3) of the Code.