rr-98-44.pdf

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# Part I

Section 355. -- Distribution of Stock and Securities of a
Controlled Corporation

26 CFR 1.355-2: Limitations.
(Also § 7805; 301.7805-1.)

Rev. Rul. 98-44

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 § 1012 of the
Taxpayer Relief Act of 1997, Pub. L. No. 105-34, 111 Stat. 788,
914-18 (the "Act"), as amended in $ 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 $$ 351, 355, and 368 of
the Internal Revenue Code. Subject to certain transition rules,
§ 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 § 1012 (c) of the Act.

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# 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) .