SECTION 1. BUSINESS PURPOSE GUIDELINES

Appendix A provides guidelines that the Service will use, for ruling purposes, in evaluating whether a distribution satisfies the corporate business purpose requirement in certain situations. These guidelines apply in addition to the requirements specified in section 4.04 of this revenue procedure.

The business purposes described in this Appendix A are not an exclusive list of Corporate Business Purposes for which the Service will issue a favorable ruling. If a purpose for the transaction is not described in Appendix A of this revenue procedure, the taxpayer should follow section 4.04 of this revenue procedure to establish that the distribution satisfies the corporate business purpose requirement. The failure of a transaction to meet the guidelines in this Appendix A does not, in and of itself, mean that the distribution is not carried out for a Corporate Business Purpose. Moreover, the Service will consider requests for rulings that do not satisfy the guidelines in this Appendix A and may rule favorably in appropriate circumstances. Conversely, although a transaction may fall within the literal language of these guidelines, the Service will not issue a favorable ruling unless it is satisfied that the transaction is motivated, in whole or substantial part, by a real and substantial nonfederal tax purpose germane to the business of Distributing, Controlled, or the affiliated group to which Distributing belongs, and that the purpose cannot be achieved through a nontaxable transaction that does not involve the distribution of Controlled stock and which is neither impractical nor unduly expensive. The Service will continue to evaluate the guidelines in this Appendix A and may modify them when appropriate.

The Service recognizes that a particular transaction may be motivated, in whole or substantial part, by more than one business purpose described in this Appendix A. Generally, in such cases, satisfying the guidelines for one Corporate Business Purpose that motivates the transaction, in substantial part, will suffice.

A reference to Distributing or Controlled includes, as the context requires, a reference to Other Corporations (as defined in section 4.03(5) of this revenue procedure), or to a corporation that will be formed as part of the transaction.