CORPORATE REORGANIZATIONS: "B" reorganization: Acquisition by one corporation of
stock of another corporation--application for tax ruling
by Stephen E. Pigott
The second type of reorganization defined in the Internal Revenue Code, a "B"
reorganization, is a transaction in which one corporation acquires the controlling stock interest in another. The Code definition of a "B" reorganization is
"the acquisition by one corporation, in exchange solely for all or a part of its
voting stock (or in exchange solely for all or a part of the voting stock of a
corporation which is in control of the acquiring corporation), of stock of another corporation if, immediately after the acquisition, the acquiring corporation has control of such other corporation (whether or not such acquiring corporation had control immediately before the acquisition)."
"B" reorganization:
The "B" definition applies to the acquisition by a holding company of
stock of another corporation from the latter's shareholders. Typically, the shareholders of X Corp. turn over 80% or more of their X stock
to Y Corp. (or to a corporation controlled by Y Corp.) in return for
part or all of Y's voting stock. Y Corp. (or the corporation controlled by Y Corp.) is then the holding company, and X Corp. is the
operating subsidiary.
The term "control" means the ownership of stock possessing at least
80% of the total combined voting power of all classes of stock entitled to vote and at least 80% of the total number of shares of all
other classes of stock of the corporation. This must be literally satisfied. Mere voting control is not sufficient unless the specified
percentages of voting and nonvoting stock are acquired. Moreover,
there must be direct ownership of such stock.
Voting stock:
The definition of a "B" reorganization requires that the acquisition
of the stock by a corporation be in exchange solely for all or a part
of its "voting stock." This requirement, introduced in the 1954 Act,
essentially replaced the prior judicial test which merely required
"continuity of interest" of the X shareholders in relation to Y Corp.
An acquisition does not qualify where the acquiring corporation's previously sole shareholder is given the exclusive right for five years
to vote the shares exchanged for stock of the acquired corporation;
shareholders of the acquired corporation do not receive "voting stock"
in these circumstances. Nor will it be deemed an exchange for voting
stock if the "voting stock" is subject to a voting trust or some other
restriction whereby the right to vote the stock is in another party.
"Solely" for voting stock:
The requirement that the acquisition of the stock be "solely" for voting stock raises a problem where Y Corp., in a single transaction, acquires the necessary 80% control of X Corp. in exchange for its own
voting stock, and acquires additional X Corp. stock for cash (or for
nonvoting preferred stock or bonds). Under the 1939 Code, such a
transaction was held to violate the statutory requirement. The same
result would seem to follow currently. Although the Regulations do not
expressly cover the point, they indicate that any cash purchases in a
series of transactions covering a short period of time (e.g., 12
months) would vitiate the acquisitions for voting stock within that
period. Since the acquired corporation's convertible debentures are
not "stock," their acquisition for cash coupled with and conditioned
upon the acquisition of the entire stock interest in exchange for voting stock does not disqualify a reorganization. Similarly, the acquisition of a corporation's stock and debentures for the acquiring corporation's stock and new debentures qualifies if the issued debentures
do not constitute additional consideration for the acquired corporation's stock, even though some of the surrendered debentures are held
by shareholders of the old company.
Fractional shares:
The "solely" for voting stock requirement also poses the troublesome
problem of fractional shares. The Service has long sanctioned the device of permitting such an interest to be bought or sold by the shareholders without adversely affecting the reorganization itself. An appellate court even allowed the reorganization where cash in lieu of
fractional shares was paid directly by the acquiring corporation under
the reorganization plan. The small amount of cash was not an independent part of the consideration, so the "sole" consideration was the
voting stock. The Service then ruled that the statute is satisfied
where cash paid by the acquiring corporation represents a mechanical
rounding-off of fractional shares to which the shareholders of the acquiring corporation are entitled. It has also ruled that the "solely"
requirement is not violated where the acquiror agrees to substitute
its stock for that of the acquired corporation for purposes of unexercised stock warrants and employee stock options.
"C" reorganizations:
In a "C" reorganization the remainder of the properties in excess of
80% may be acquired for cash or other property (see comment on Form
16.13). The "solely for voting stock" requirement may be jeopardized
if the acquiring corporation grants an option to the transferor corporation whereby the acquiring corporation may be required to purchase
part of its own stock. But the reorganization is not destroyed by such
an option granted independently by the shareholders. It is important
to note that if the reorganization itself is disqualified because the
acquisition is not "solely" for voting stock, then the shareholder's
gain is fully recognized, even if that gain exceeds the amount of cash
and other property received by the shareholder. Where an acquisition
of stock and debentures is made for the stock of the acquiring corporation, the Revenue Service's position is that the transaction is a
nontaxable stock-for-stock exchange plus a taxable exchange of stock
for debentures. An acquisition does not qualify where 60% of the stock
of the acquired corporation is obtained in a transaction where all the
parent corporation's assets are transferred to the acquiring corporation for voting stock plus the assumption of liabilities and the remaining 40% is acquired from individual shareholders in stock-forstock exchanges, because the assumption of liabilities constitutes additional consideration. Thus, the 40% shareholders must recognize gain
or loss where both transactions are part of the overall plan. The corporate asset acquisition qualifies as a "C" reorganization, however. A
prior purchase of stock for cash will not violate the "solely for voting stock" requirement where the stock is unconditionally sold to an
unrelated party before the reorganization exchange.
The so-called "creeping" control problem arose under the provisions of
the 1939 Code in the case where Y Corp., already owning some X stock,
acquired additional X stock in an exchange solely for its own voting
stock. If the required percentage of stock was owned after the later
acquisition, it appeared that such acquisition qualified as a "B" reorganization. The 1954 Code liberalized the rule by providing that the
acquisition of control in exchange solely for voting stock qualifies
as a "B" reorganization "whether or not such acquiring corporation had
control immediately before the acquisition."
Redemption:
If an integral part of the plan requires Y Corp. to redeem part of the
stock issued for the X stock, the cash redemption price would seem to
violate the "solely for voting stock" requirement. But, an acquisition
has been accepted as being solely for stock despite a cash redemption
of part of the stock shortly after the reorganization, where the corporation had no commitment for such redemption.
The Code provisions governing the recognition of gain or loss to the
shareholders of X Corp. upon the exchange require that the shareholders receive, in exchange for their X stock, stock in a "party to the
reorganization." The definition of a "party to the reorganization" has
been expanded (in line with the provision permitting the stock of X
Corp. to be acquired by a subsidiary of Y Corp.) to include a corporation controlling the corporation to which the acquired stock is transferred. Thus, the acquisition of the stock of X Corp. by S Corp., a
"controlled" subsidiary of Y Corp. will qualify if the X shareholders
receive Y Corp. stock in exchange. Moreover, an otherwise qualifying
"B" reorganization is not disqualified if Y Corp. subsequently transfers the X Corp. stock to S Corp. In both these instances, Y Corp. is
also a "party to the reorganization." A transaction qualified although
the acquiring corporation creates a separate wholly owned subsidiary
which merges into the acquired corporation as a means of eliminating
its dissenting shareholders. Similarly, where a subsidiary is formed
solely to acquire the assets of another corporation in exchange for
the parent's stock, the immediate liquidation of the subsidiary into
the parent following the exchange qualifies as a "C" reorganization.
Basis:
When Y Corp. acquires the stock of X Corp. in a "B" reorganization,
the stock retains the same basis that it had in the hands of the X
Corp. shareholders. Thus, Y Corp. must depend upon the records of the
individual shareholders of X Corp. to establish its own basis. In the
absence of such records, some difficult practical problems can arise
in any subsequent taxable disposition by Y Corp. of all or part of the
stock of X Corp.
The form below is an agreement and plan of a "B" reorganization under
which one corporation acquires from a group of individuals all of the
issued and outstanding stock of another corporation in exchange solely
for the former's own, newly issued voting stock, in accordance with an
exchange ratio set out in the agreement. It should be noted that the
corporation whose stock is being acquired is made a party to the
agreement so that it can accept certain restrictions on its activities
during the period prior to the closing.
The reorganization is conditioned upon the receipt of a favorable tax
ruling or, if that is not possible before the date fixed for closing,
an opinion from counsel stating that the reorganization qualifies as
tax-free. An example of the application for such ruling is made part
of this form. For additional examples of applications for tax rulings
and discussion, see Forms 16.07, 16.13, and "The Tax Background."
It will be noted that this form utilizes the traditional "stockstockholder" terminology as distinguished from the "share-shareholder"
terminology. The "stock-stockholder" terminology is the language of
the Delaware statute. The "share-shareholder" terminology is the current fashion. As indicated in the comment on Form 16.01, the draftsman
will have no trouble in adapting the form he desires to employ to the
appropriate terminology.
FORM
(1) Agreement and plan of reorganization
AGREEMENT AND PLANS OF REORGANIZATION, dated as of ____________________[date],
among The Sussex Corporation, a Delaware corporation, hereinafter called Sussex;
The Marlboro Corporation, a Delaware corporation, hereinafter called Marlboro;
and John Irvine, Robert Edwards, Frederick Blaine, Mark Jones, William Smith,
Philip McKay, John Rhodes, Lewis Arnold, Richard Toole, and Robert Niven, hereinafter called the Stockholders.
1. Plan of reorganization. The Stockholders are the owners of all of the issued
and outstanding stock of Marlboro, which consists of 5,000 shares of common
stock of the par value of 25 cents per share. It is the intention of the parties
hereto that all of the issued and outstanding capital stock of Marlboro shall be
acquired by Sussex in exchange solely for its voting stock.
2. Exchange of shares. Sussex and the Stockholders agree that all of the 5,000
shares of Marlboro shall be exchanged with Sussex for 25,000 shares of the com-
mon stock of Sussex. The following numbers of Sussex shares will, on the closing
date, as hereinafter defined, be delivered to the individual Stockholders in exchange for their Marlboro shares as hereinafter set forth:
Stockholder
No of Shares
of Marlboro
John Irvine
Robert Edwards
Frederick Blaine
Mark Jones
William Smith
Philip McKay
John Rhodes
Lewis Arnold
Richard Toole
Robert Niven
1,500
700
700
500
500
300
300
200
200
100
____________________
5,000
No. of Sussex
Shares To
Be Issued
7,500
3,500
3,500
2,500
2,500
1,500
1,500
1,000
1,000
500
____________________
25,000
Such shares shall be issued in certificates of such denominations, amounts, and
names as may be requested by the respective Stockholders. The Stockholders represent and warrant that they will hold such shares of common stock of Sussex for
investment.
3. Delivery of shares. On the closing date, the Stockholders will deliver certificates for the shares of Marlboro duly endorsed with signatures guaranteed
and with documentary stamps affixed at the Stockholders' expense so as to make
Sussex the sole owner thereof, free and clear of all claims and encumbrances;
and on such closing date delivery of the Sussex shares, on which documentary
stamp taxes will have been paid by Sussex, will be made to the Stockholders as
above set forth. Delivery will be made at such place in or about Los Angeles,
California, as may be determined by the parties. Time is of the essence.
4. Representations of stockholders. The Stockholders represent and warrant as
follows:
(a) As of the closing date they will be the sole owners of the shares appearing
of record in their names; such shares will be free from claims, liens, or other
encumbrances; and, subject to the escrow of such shares established pursuant to
permits heretofore issued to Marlboro by the Commissioner of Corporations of the
State of California with respect to the issuance thereof in escrow, they will
have the unqualified right to transfer such shares.
(b) The shares constitute validly issued shares of Marlboro, fully paid and
nonassessable.
(c) The audited financial statements of Marlboro, as of
____________________[date], which will be delivered to Sussex prior to the closing date, are true and complete statements of the financial condition of Marlboro as of that date; there are no substantial liabilities, either fixed or contingent, not reflected in such financial statements other than contracts or obligations in the usual course of business; and no such contracts or obligations
in the usual course of business are liens or other liabilities which, if dis-
closed, would alter substantially the financial condition of Marlboro as reflected in such financial statements.
(d) Since ____________________[date], there have not been, and prior to the
closing date there will not be, any material changes in the financial position
of Marlboro, except changes arising in the ordinary course of business.
(e) Marlboro is not involved in any pending litigation or governmental investigation or proceeding not reflected in such financial statements or otherwise
disclosed in writing to Sussex and, to the knowledge of Marlboro or the Stockholders, no litigation or governmental investigation or proceeding is threatened
against Marlboro.
(f) As of the closing date, Marlboro will be in good standing as a Delaware corporation.
5. Representations of acquiring corporation. Sussex represents and warrants as
follows:
(a) As of the closing date, the Sussex shares to be delivered to the Stockholders will constitute the valid and legally issued shares of Sussex, fully paid
and nonassessable, and will be legally equivalent in all respects to the common
stock of Sussex issued and outstanding as of the date hereof.
(b) The officers of Sussex are duly authorized to execute this agreement pursuant to authorization of its stockholders.
(c) Sussex's balance sheet dated ____________________[date], is a true and complete statement, as of that date, of its financial condition, and its Statement
of Earnings for the nine months ended ____________________[date], fairly presents the results of its operations for such period; there are no substantial
liabilities, either fixed or contingent, not reflected in such financial statements other than contracts or obligations in the usual course of business; and
no such contracts or obligations in the usual course of business are liens or
other liabilities which, if disclosed, would alter substantially the financial
condition of Sussex as reflected in such financial statements.
(d) Since ____________________[date], there have not been, and prior to the
closing date there will not be, any material changes in the financial position
of Sussex, except changes arising in the ordinary course of business.
(e) Sussex is not involved in any pending litigation or governmental investigation or proceeding not reflected in such financial statements or otherwise disclosed in writing to the Stockholders.
(f) As of the closing date, Sussex will be in good standing as a Delaware corporation.
(g) The shares of Marlboro are being acquired by Sussex as an investment, and
there is no present intention on the part of Sussex to dispose of such shares.
6. Agreement as to escrow. All of the issued and outstanding shares of Marlboro
are presently held in escrow pursuant to an order of the Commissioner of Corporations of the State of California, the Stockholders agree that they will cause
an Order of such Commissioner of Corporations to issue pursuant to which such
shares may be transferred to Sussex within the escrow.
7. Conditions of closing. The closing date herein referred to shall be
____________________[date], or such other date as the parties hereto may mutually agree upon. All representations and covenants herein made shall survive the
closing. At the closing the Stockholders hereby designate, nominate, constitute,
and appoint Robert Edwards and Mark Jones, and each of them, as their agents and
attorneys in fact to accept delivery of the certificates of Sussex stock to be
issued in their respective names, and to give a good and sufficient receipt and
acquittance for the same, and in connection therewith to make delivery of their
stock in Marlboro to Sussex. The obligations of Sussex hereunder are conditioned
upon its obtaining a permit of the Commissioner of Corporations of the State of
California for the issuance of its common stock to Stockholders as hereinabove
provided. The obligations of both Marlboro and Sussex are further conditioned
upon the receipt of a favorable tax ruling regarding the tax-free character of
the reorganization under I.R.C. § 368(a)(1)(B); but, if the issuance of such a
favorable ruling does not occur before ____________________[date], then this
condition may be waived upon submission of a written statement by Messrs. Edwards and Jones stating that in their opinion such favorable tax treatment
should result.
8. Prohibited acts. Marlboro agrees not to do any of the following things prior
to the closing date, and the Stockholders agree that prior to the closing date
they will not request or permit Marlboro to do any of the following things:
(a) Declare or pay any dividends or other distributions on its stock or purchase
or redeem any of its stock;
(b) Issue any stock or other securities, including any right or option to purchase or otherwise acquire any of its stock, or issue any notes or other evidences of indebtedness not in the usual course of business;
(c) Make capital expenditures in excess of an aggregate of $25,000 except with
the consent of Sussex.
9. Delivery of records. The Stockholders agree that on or before the closing
date they will cause to be delivered to Sussex such corporate records or other
documents of Marlboro as Sussex may request.
10. Notices. Any notice which any of the parties hereto may desire to serve upon
any of the other parties hereto shall be in writing and shall be conclusively
deemed to have been received by the party to whom addressed, if mailed, postage
prepaid, United States Registered Mail, to the following addresses:
The Sussex Corporation, 100 Broad Avenue, Los Angeles, California, Attention of
Mark Jones, President
Stockholders: c/o Mr. William Smith, The Marlboro Corporation, 100 1st Avenue,
San Diego, California.
11. Successors. This agreement shall be binding upon and inure to the benefit of
the heirs, personal representatives, successors, and assigns of the parties.
Executed in multiple counterparts, each of which shall be deemed a duplicate
original, as of the date first above written.
The Sussex Corporation
Corporate Seal
by ______________________
Attest:
President
_____________________________
Secretary
The Marlboro Corporation
Corporate Seal
by ______________________
Attest:
President
_____________________________
Secretary
Stockholders:
______________________
______________________
John Irvine
Robert Edwards
______________________
______________________
Frederick Blaine
Mark Jones
______________________
______________________
William Smith
Philip McKay
______________________
______________________
John Rhodes
Lewis Arnold
______________________
______________________
Richard Toole
Robert Niven
(2) Application for tax ruling
[date]
Commissioner of Internal Revenue
Washington, D. C. 20224
Attention:Tax Rulings Division
Reorganization Branch
Re: Name
John Irvine
San Diego,
Cal.
Robert Edwards
San Diego,
Cal.
Frederick
Blaine
San Diego,
Cal.
Mark Jones
San Diego,
Cal.
William Smith
San Diego,
Cal.
Philip McKay
San Diego,
Cal.
John Rhodes
Address
Taxpayer
Filing
IdentificaDistrict
tion #
14 Washington St. 091-28-9000
Los Angeles
28 Adams Place
092-18-7000
Los Angeles
7300 Winslow Ave. 092-17-4000
Los Angeles
59 Penbroke Ave.
091-28-9500
Los Angeles
525 Hart Boulevard
105-24-8000
Los Angeles
3333 West End
Ave.
271-19-4567
Los Angeles
621 Brighton Ave. 345-67-8901
Los Angeles
Re: Name
San Diego,
Cal.
Lewis Arnold
San Diego,
Cal.
Richard Toole
San Diego,
Cal.
Robert Niven
San Diego,
Cal.
The Sussex
Corporation
The Marlboro
Corporation
Address
943 E. 73rd St.
Taxpayer
Identification #
Filing
District
123-45-6789
Los Angeles
141 Valencia Ave. 415-26-3748
Los Angeles
123 Ausable Ave.
876-12-5396
Los Angeles
13-1740000
Los Angeles
13-1900000
Los Angeles
Dear Sir:
We hereby submit a request for a ruling in behalf of the persons above-named,
hereinafter called the Stockholders, with respect to the effect for federal income tax purposes of the transfer by them to The Sussex Corporation, hereinafter
called Sussex, in pursuance of a plan of reorganization, of all the stock of The
Marlboro Corporation, hereinafter called Marlboro, in exchange solely for common
stock of Sussex. The transaction is to be consummated pursuant to an Agreement
and Plan of Reorganization, dated as of ____________________[date], attached as
Exhibit 1, hereinafter called the Agreement.
FACTS
The facts upon which this request for a ruling is based are as follows:
1. Description of Marlboro. Marlboro is a Delaware corporation which was organized in 1952 and is engaged in the manufacture and sale of nylon fabrics. Its
total authorized capital stock consists of 5,000 shares of common stock with a
par value of 25cent(s) each, all of which are outstanding. The outstanding
shares of Marlboro are owned by the Stockholders and are to be conveyed by them
in the following amounts:
Stockholder
No. of Shares
No. of Sussex Shares
of Marlboro
To Be Issued
John Irvine
1,500
7,500
Robert Edwards
700
3,500
Frederick Blaine 700
3,500
Mark Jones
500
2,500
William Smith
500
2,500
Philip McKay
300
1,500
John Rhodes
300
1,500
Lewis Arnold
200
1,000
Richard Toole
200
1,000
Robert Niven
100
500
____________________ ____________________
Stockholder
No. of Shares
of Marlboro
5,000
No. of Sussex Shares
To Be Issued
25,000
Financial statements of Marlboro as of ____________________[date], are attached
hereto as Exhibit 2.
2. Description of Sussex. Sussex is a Delaware corporation organized in 1946.
Since that time, it has engaged exclusively in the purchase, management, development, and sale of real property. It has an authorized capital stock of 200,000
shares of common stock, of which 100,000 shares are issued and outstanding. Financial statements of Sussex for the period ending ____________________[date],
are attached hereto as Exhibit 3.
3. Acquisition of stock. Under the agreement, Sussex will acquire all of the
common stock of Marlboro from the Stockholders by issuing to them 25,000 shares
of Sussex common stock. Each Stockholder will be issued five shares of Sussex
stock for each share of Marlboro conveyed by him (as listed in paragraph 1
above). The common stock of Sussex to be issued to the Stockholders will be legally equivalent in all respects to the common stock of Sussex presently issued
and outstanding.
4. Business purpose. Sussex' purpose in acquiring the stock of Marlboro is to
diversify its investments, which until now have been exclusively in real estate.
Sussex warrants that the shares of Marlboro are being acquired as an investment
and that there is no present intention to dispose of them. The Stockholders warrant that they will hold the shares of Sussex for investment.
5. Expenses of reorganization. No consideration other than that described in
paragraph 3 above will be transferred in the reorganization. Sussex and the
Stockholders will pay their own expenses in connection with the reorganization.
Representations Required Pursuant to
Legend:
Target
Acquiring
=
=
the corporation
whose
stock is
acquired
Rev. Proc. 86-42
the acquiring corporation
1. The fair market value of the Acquiring stock received by each Target shareholder will be approximately equal to the fair market value of the Target stock
surrendered in the exchange.
2. There is no plan or intention by the shareholders of Target who own 1 percent
or more of the Target stock, and to the best of the knowledge of the management
of Target, there is no plan or intention on the part of the remaining shareholders of Target to sell, exchange, or otherwise dispose of a number of shares of
Acquiring stock received in the transaction that would reduce the Target shareholders' ownership of Acquiring stock to a number of shares having a value, as
of the date of the transaction, of less than 50 percent of the value of all of
the formerly outstanding stock of Target as of the same date. For purposes of
this representation, shares of Target stock surrendered by dissenters or ex-
changed for cash in lieu of fractional shares of Acquiring stock will be treated
as outstanding Target stock on the date of the transaction. Moreover, shares of
Target stock and shares of Acquiring stock held by Target shareholders and otherwise sold, redeemed, or disposed of prior or subsequent to the transaction
will be considered in making this representation. (Alternatively, for publicly
traded companies, submit the above representation substituting "5 percent" for
"1 percent" where it appears.)
3. Target has no plan or intention to issue additional shares of its stock that
would result in Acquiring losing control of Target within the meaning of Section
368(c) of the Internal Revenue Code.
4. Acquiring has no plan or intention to liquidate Target; to merge Target into
another corporation; to cause Target to sell or otherwise dispose of any of its
assets, except for dispositions made in the ordinary course of business; or to
sell or otherwise dispose of any of the Target stock acquired in the transaction, except for transfers described in Section 368(a)(2)(C) of the Internal
Revenue Code.
5. Acquiring has no plan or intention to reacquire any of its stock issued in
the transaction.
6. Acquiring, Target, and the shareholders of Target will pay their respective
expenses, if any, incurred in connection with the transaction.
7. Acquiring will acquire Target stock solely in exchange for Acquiring voting
stock. For purposes of this representation, Target stock redeemed for cash or
other property furnished by Acquiring will be considered as acquired by Acquiring. Further, no liabilities of Target or the Target shareholders will be assumed by Acquiring, nor will any of the Target stock be subject to any liabilities.
8. At the time of the transaction, Target will not have outstanding any warrants, options, convertible securities, or any other type of right pursuant to
which any person could acquire stock in Target that, if exercised or converted,
would affect Acquiring's acquisition or retention of control of Target, as defined in Section 368(c) of the Internal Revenue Code.
9. Acquiring does not own, directly or indirectly, nor has it owned during the
past five years, directly or indirectly, any stock of Target.
10. Following the transaction, Target will continue its historic business or use
a significant portion of its historic business assets in a business.
11. No two parties to the transaction are investment companies as defined in
Section 368(a)(2)(F)(iii) and (iv) of the Internal Revenue Code.
12.
its
ly,
any
Target will pay its dissenting shareholders the value of their stock out of
own funds. No funds will be supplied for that purpose, directly or indirectby Acquiring, nor will Acquiring directly or indirectly reimburse Target for
payments to dissenters.
(Alternatively) There will be no dissenters to the transaction.
13. On the date of the transaction, the fair market value of the assets of Target will exceed the sum of its liabilities plus the liabilities, if any to which
the assets are subject.
Request for Ruling
Request is hereby made for a ruling which will establish the following results:
1. The acquisition by Sussex, in exchange for 25,000 shares of its common stock,
of all of the stock of Marlboro, constitutes a "reorganization" as defined in
I.R.C. § 368(a)(1)(B).
2. No gain or loss will be recognized by the Stockholders upon the transfers of
their shares of Marlboro in exchange for Sussex stock. I.R.C. § 354(a)(1).
3. The basis of the common stock of Sussex received by the Stockholders will be
the same as the basis of the common stock of Marlboro exchanged therefor. I.R.C.
§ 358(a).
4. The holding period of the common stock of Sussex received by the Stockholders
will include the period for which they have held the shares of common stock of
Marlboro exchanged therefor. I.R.C. § 1223(1).
Powers of Attorney
Separate Powers of Attorney executed by each of the Stockholders are enclosed.
Conference
We would appreciate your advising us if you should find that a
be helpful at any stage of your consideration of this request,
ence may be in the interest of the taxpayers. In the event you
information after submission of this request, please telephone
collect at 212-686-4975.
conference would
or that a conferwish any further
the undersigned
Respectfully submitted,
______________________
Counsel
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