Part I. Rulings and Decisions Under the Internal Revenue Code of 1986

former T shareholders and, thus, the repurchase would not be treated as “in connection with” the merger. Under the facts presented, a sale of P stock on the open market by a former T shareholder during the repurchase program will have the same effect on continuity of interest as a mere disposition to persons not related to P.

HOLDING

Under the facts presented, the open market repurchase of shares through a broker has no effect on continuity of interest in the potential reorganization.

DRAFTING INFORMATION

The principal author of this revenue ruling is Marie C. Milnes-Vasquez of the Office of Assistant Chief Counsel (Corporate). For further information regarding this revenue ruling, contact Ms. MilnesVasquez on (202) 622-7770 (not a tollfree call).

Section 743.—Optional Adjustment to Basis of Partnership Property

26 CFR 1.743-1: Optional adjustment to basis of partnership property.

T.D. 8847

DEPARTMENT OF THE TREASURY

26 CFR Parts 1 and 602

Adjustments Following Sales of Part- nership Interests AGENCY: Internal Revenue Service (IRS), Treasury. ACTION: Final Regulations. SUMMARY: This document finalizes regulations relating to the optional adjustments to the basis of partnership property following certain transfers of partnership interests under section 743, the calculation of gain or loss under section 751(a) following the sale or exchange of a partnership interest, the allocation of basis adjustments among partnership assets under section 755, the allocation of a partner’s basis in its partnership interest to proper

Section 368.—Definitions Relating to Corporate Reorganizations

26 CFR 1.368–1(e): Continuity of interest.

Continuity of interest on repurchase of issuer’s shares. This ruling holds that an open market repurchase of shares through a broker has no effect on continuity of interest in a potential reorganization.