SECTION 2. BACKGROUND

Section 355(a) applies to distributions of stock or securities of a corporation controlled by the distributing corporation if the requirements of § 355 are satisfied. Rev. Proc. 96–30 sets forth in a checklist questionnaire the information that must be included in a request for rulings under § 355.

Section 1.355–2(b) of the Income Tax Regulations provides that to qualify as a distribution described in § 355,

July 21, 2003 86 2003-29 I.R.B.

This is a pilot program that applies to ruling requests postmarked or, if not mailed, received after August 8, 2003. This pilot program is intended to operate for at least one year. After that time, the Service may consider further changes, including ruling only on significant issues (as defined in Section 3.01(29) of Rev. Proc. 2003–3) under § 355.

Section 4.05 of this revenue procedure provides that the Service will decline a request for a ruling regarding a proposed or completed transaction if the Service has previously declined to rule on that transaction (or a similar transaction) because the Service was not satisfied that the distribution met the corporate business purpose requirement, was not a device for the distribution of earnings and profits, or was not part of a plan under § 355(e).

Section 4.06 of this revenue procedure provides that the Service will decline a request for a supplemental ruling, unless the request presents a significant issue (as defined in section 3.01(29) of Rev. Proc. 2003–3). Section 4.01(30) of Rev. Proc. 2003–3 provides that a letter ruling ordinarily will not be issued regarding the issue of whether the active business requirement of § 355(b) is met when the gross assets of the trades or businesses relied on to satisfy that requirement will have a fair market value that is less than 5 percent of the total fair market value of the gross assets of the corporation directly conducting the trades or businesses. Section 4.07 of this revenue procedure modifies Rev. Proc. 2003–3 by deleting section 4.01(30).