Internal Revenue Service
Revenue Ruling

TaxLinks.com   sm

 Rev. Rul. 75-19

1975-1 C.B. 382

Sec. 7701

IRS Headnote

Partnership arrangement among corporations; tax classification. A partnership formed under a statute corresponding to the Uniform Partnership Act by a domestic corporation's four domestic subsidiaries, each with business reasons for independent existence outside the partnership, for the purpose of purchasing a crude oil storage barge and chartering it to an unrelated corporation, and not to avoid tax, is classified as a partnership.

Full Text

Rev. Rul. 75-19

Four domestic corporations, each of which is a subsidiary of the same domestic parent, entered into a partnership agreement for the purpose of purchasing a crude oil storage barge and chartering it to an unrelated corporation. The arrangement among the subsidiary corporations was formed under a statute corresponding to the Uniform Partnership Act. The subsidiary corporations each have business reasons for existence independent of the business to be performed under the partnership agreement, and the agreement was not entered into for the purpose of avoiding or evading Federal income tax.

Held, since the arrangement among the subsidiaries is subject to a statute corresponding to the Uniform Partnership Act, it lacks the corporate characteristics of continuity of life, centralization of management, and limited liability. See section 301.7701-2(b)(3), (c)(4), and (d)(1) of the Procedure and Administration Regulations. Therefore, the arrangement does not have more corporate than noncorporate characteristics, and it is classified as a partnership for Federal income tax purposes. See section 301.7701-2(a)(3).