SECTION 1. — Internal Revenue Bulletin 1996-19

.01 This Appendix C contains representations regarding S corporation status that the taxpayer may submit to lessen the Service’s concerns about the potential avoidance of federal taxes. These representations may be submitted if either Distributing or Controlled will be eligible to elect S corporation status after the distribution. If either Distributing or Controlled will be eligible to elect S corporation status after the distribution, but the taxpayer does not submit any of the representations in this Appendix C, please explain. The taxpayer’s failure to submit any of the representations will not prevent the Service from issuing a favorable ruling if it is satisfied that the distribution is motivated in whole or substantial part by one or more Corporate Business Purposes. On the other hand, there may be cases where the submission of one of the representations will not conclusively establish that the transaction does not have the potential for the avoidance of federal taxes.

(1) No S elections. REPRESENTATION: The distributing corporation is not an S corporation (within the meaning of § 1361(a)), and there is no plan or intention by the distributing or controlled corporation to make an S corporation election pursuant to § 1362(a).

(2) Distributing and Controlled will elect S corporation status. REPRESENTATION: The distributing corporation is not an S corporation (within the meaning of § 1361(a)), but immediately before the distribution, the distributing corporation will be eligible to make an S corporation election pursuant to § 1362(a). The distributing and controlled corporations will elect to be an S corporation pursuant to § 1362(a) on the first available date after the distribution, and there is no plan or intent to revoke or otherwise terminate the S corporation election of either the distributing or controlled corporation.

(3) Distributing is an S corporation. REPRESENTATION: The distributing corporation is an S corporation (within the meaning of § 1361(a)). The controlled corporation will elect to be an S corporation pursuant to § 1362(a) on the first available date after the distribution and there is no plan or intent to revoke or otherwise terminate the S corporation election of either the distributing or controlled corporation.