IRS Pilot Program Expands the Scope of Letter Rulings for Section 355 Transactions (Rev. Proc. 2017-52)

The IRS has introduced a pilot program expanding the scope of letter rulings to include, for a period of time, rulings on the tax consequences of Code Sec. 355 distributions. Additionally, this guidance provides instructions for taxpayers requesting these rulings and clarifies procedures for taxpayers requesting rulings on significant issues relating to these transactions.

Section 355 Transactions

Under the procedure, a taxpayer may request a ruling addressing the general federal income tax consequences of a covered transaction (a transactional ruling). A covered transaction is a transaction intended to qualify under Code Secs. 368(a)(1)(D) and 355, or a distribution that is intended to qualify under Code Sec. 355(a) and (c). In addition, a transactional ruling may include the tax consequences of a covered transaction under other code sections.

Generally, a taxpayer requesting a transactional ruling must follow the procedures in Rev. Proc. 2017-1, for requesting a letter ruling. Also, the taxpayer must submit relevant documentation described in section 3.02 of Rev. Proc. 2017-52 .

Information Required

Additionally, the taxpayer must provide factual information and legal analysis as described in section 3.03 of this revenue procedure. Specifically, the taxpayer must include a description of each covered transaction and each other transaction that is part of the same plan or series of related transactions. The request must also include a description and analysis of all legal issues that may affect the requested rulings. Finally, a taxpayer requesting a transactional ruling must include a statement that the taxpayer makes all the representations described in section 3 of the Appendix to this revenue procedure.

Moreover, if a taxpayer receives a transactional ruling, the taxpayer may request a supplemental ruling if, at the time the supplemental ruling request is submitted, the facts are materially different from the controlling facts on which the transactional ruling was based. In addition, the procedure allows a taxpayer to request a significant issue ruling, pursuant to section 3.01(51) of Rev. Proc. 2017-3 , I.R.B. 2017-1, 130, as modified by this revenue procedure, even if the covered transaction would qualify for a transactional ruling. However, the IRS may decline to issue a significant issue ruling if issuing a ruling on only part of an integrated transaction would not be in the best interests of tax administration.

Effective and End Dates

Generally, the guidance applies to all ruling requests postmarked or, if not mailed, received by the IRS after September 21, 2017. However, if a taxpayer has a request for a significant issue ruling that is postmarked or, if not mailed, received by the IRS on or before September 21, 2017 (a pending ruling request), the taxpayer may convert that pending ruling request to a transactional ruling request by submitting the information and documentation required under this revenue procedure. However, all conversion requests must be submitted on or before November 20, 2017, and no extensions will be granted.

This pilot program will expire on March 21, 2019. At that time, the IRS will evaluate the effectiveness and sustainability of the program and consider whether the program should be extended. Consequently, this procedure will continue to apply to all ruling requests postmarked or, if not mailed, received by the IRS on or before March 21, 2019 (a submitted ruling request) if the submitted ruling request is a complete and thorough submission (see section 7.01 of Rev. Proc. 2017-1 ).

Request for Comments

The IRS requests comments on all aspects of this revenue procedure. Written comments may be submitted electronically to, and must include “Rev. Proc. 2017-52” in the subject line of any electronic communications. Comments should be submitted no later than December 31, 2017.


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