Rev. Rul. 98-44, 1998-37 I.R.B. 4.

INTERNAL REVENUE SERVICE
Revenue Ruling

SECTION 355

Released: August 31, 1998
Published: September 14, 1998

Section 355. - Distribution of Stock and Securities of a Controlled Corporation, 26 CFR 1.355-2: Limitations.

The revenue ruling declares Rev. Rul. 70-225 obsolete because it is no longer determinative following modifications made by the Taxpayer Relief Act of 1997, as amended by the Tax Technical Corrections Act of 1998.

Section 355. This ruling declares Rev. Rul. 70-225 obsolete because it is no longer determinative following modifications made by the Taxpayer Relief Act of 1997, as amended by the Tax Technical Corrections Act of 1998. Rev. Rul. 70-225 addresses a distribution of the stock of a newly formed controlled corporation followed by an acquisition of the stock of the controlled corporation. Rev. Rul. 70-225 obsoleted.

Rev. Rul. 70-225, 1970-1 C.B. 80, modified by Rev. Rul. 98-27, 1998-22 I.R.B. 4, addresses a distribution of the stock of a newly formed controlled corporation followed by an acquisition of the stock of the controlled corporation. Rev. Rul. 70-225 is no longer determinative following enactment of s 1012 of the Taxpayer Relief Act of 1997, Pub.L. No. 105-34, 111 Stat. 788, 914-18 (the "Act"), as amended in s 6010(c) of the Tax Technical Corrections Act of 1998, Pub.L. No. 105-206, 112 Stat. 790, 813-14, which modified certain provisions in ss 351, 355, and 368 of the Internal Revenue Code. Subject to certain transition rules, s 1012(c) of the Act is effective for transfers after August 5, 1997.

Accordingly, Rev. Rul. 70-225 is declared obsolete as of the effective date of s 1012(c) of the Act.

DRAFTING INFORMATION

The principal author of this revenue ruling is Phoebe Bennett of the Office of Assistant Chief Counsel (Corporate). For further information regarding this revenue ruling, contact Ms. Bennett at (202) 622-7750 or Brendan P. O'Hara at (202) 622-7530 (not toll-free calls).