Internal Revenue Service
Revenue Ruling

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 Rev. Rul. 72-24

1972-1 C.B. 102

Sec. 341

IRS Headnote

A U.S. citizen's gain on the sale of stock in a collapsible foreign corporation that, by virtue of section 341(e)(1) of the Code, would not be considered a collapsible corporation if it were a domestic corporation may be entitled to capital gain treatment.

Full Text

Rev. Rul. 72-24

A United States citizen owned, as an investment, the capital stock of a foreign corporation that at no time since its inception has been a controlled foreign corporation as defined in section 957 of the Internal Revenue Code of 1954. During the taxable year the citizen sold his stock in the foreign corporation to an unrelated party. The facts disclose that the foreign corporation is a collapsible corporation within the meaning of section 341(b) of the Code. The facts also disclose that had the corporation been a domestic corporation, it would be excepted from the collapsible corporation provisions of the Code by virtue of the application of section 341(e)(1) of the Code.

Held, the corporation is not a collapsible corporation for purposes of section 341(a)(1) of the Code with respect to the sale of its capital stock by the United States citizen.