SECTION 1. PURPOSE

.01 This revenue procedure prescribes procedures for Taxpayers who elect to participate in a settlement initiative aimed at resolving cases involving Contingent Liability Transactions that are the same as or substantially similar to those described in Notice 2001–17, 2001–1 C.B. 730 (“Contingent Liability Transactions”).

.02 This revenue procedure provides for two resolution methodologies. The first option is a Fixed Concession Procedure set forth in Section 5. The second option is a Fast Track Dispute Resolution Procedure — Contingent Liability Cases set forth in Section 6; this second method includes the Binding Arbitration Procedure set forth in Section 7. The basic eligibility requirements for both options are set forth in Section 3. Additional eligibility requirements for the Fixed Concession Procedure are set forth in Section 5.01.

.03 Both resolution methodologies are designed to ensure that any tax benefits associated with the Contingent Liability Transactions are claimed no more than once, in

2002–43 I.R.B. 733 October 28, 2002

revenue procedure. Such applications must be sent to the Office of Tax Shelter Analysis (“OTSA”), LM:PFTG:OTSA, Attn: 351, 1111 Constitution Ave., N.W., Washington, DC 20024.

.02 With each application, the Taxpayer must submit the following:

1. A statement identifying the total capital loss reported on the Taxpayer’s income tax return(s) for the sale(s) of any stock issued by the transferee corporation in the Contingent Liability Transaction, including the tax years affected and the amount of the capital loss used in each year (including any carryback and carryforward periods);

2. A description of each class of stock issued and outstanding by the transferee corporation at the completion of the purported section 351 exchanges, including the number of shares issued in each class in the exchanges, to whom the stock was issued, the issuing prices of the stock, the par values and any voting rights;

3. A statement identifying any shares issued in the purported section 351 exchanges in connection with the assumption of the contingent liability that have not been sold or otherwise disposed of by the Taxpayer;

4. A statement indicating the average selling price per share of any stock issued by the transferee corporation in the Contingent Liability Transaction;

5. A description of the type and bases of the assets transferred by the Taxpayer in the Contingent Liability Transaction; and

6. A description of the type and amount of the liability assumed by the transferee corporation in the Contingent Liability Transaction.

.03 An Eligible Taxpayer that elects the Fast Track Dispute Resolution Procedure — Contingent Liability Cases, described in Section 6, must also submit with its application a completed Arbitration Agreement in the form appended to this revenue procedure as Exhibit 2. If the Arbitration Agreement is executed by a person pursuant to a power of attorney executed by the Taxpayer, that power of attorney must clearly express the grant of authority by the Taxpayer to consent to disclose the returns and return information of the Taxpayer by the Service to third parties, and a copy of that power of attorney must be attached to the Arbitration Agreement.