Rev. Rul. 2003-97 provides guidance on whether

interest accruing on a note is deductible under section

same interests, control is defined to include any kind of control, direct or indirect, whether legally enforceable or not, and however exercisable or exercised, including control resulting from the actions of two or more taxpayers acting in concert or with a common goal or purpose. Treas. Reg. § 1.482–1(i)(4). It is the reality of control that is decisive, not its form or the mode of its exercise. Id.; Ach v. Commis- sioner, 42 T.C. 114 (1964), aff'd, 358 F.2d 342 (6th Cir.), cert. denied, 385 U.S. 899 (1966). A presumption of control arises if income or deductions have been arbitrarily shifted. Treas. Reg. § 1.482–1(i)(4).

The issue under section 482 is whether an allocation between or among organizations, trades, or businesses owned or controlled by the same interests is necessary to prevent the evasion of taxes or clearly to reflect the income of any of such organizations, trades or businesses. Therefore, situations in which two or more taxpayers act in concert to control another organization, trade or business with a common goal or purpose to arbitrarily shift income or deductions between one or more of such taxpayers and the controlled organization, trade or business are brought within the application of section 482 by the reference in section 1.482–1(i)(4) to “control resulting from the actions of two or more taxpayers acting in concert or with a common goal or purpose.”

An example would be three equal and otherwise unrelated shareholders in a corporation that, acting in concert, individually purchase from or sell items to the corporation at prices that differ from those that would be charged by unrelated parties in similar circumstances. Even though none of the shareholders individually has actual or effective control of the corporation, where the shareholders act in concert with a common goal of shifting income or deductions from or to the corporation, section 1.482–1(i)(4) provides that each shareholder is considered to control the corporation for purposes of the application of section 482. See, e.g., B. Forman Co., Inc. v. Commissioner, 453 F.2d 1144 (2d Cir. 1972), cert. denied, 407 U.S. 934, rehearing denied, 409 U.S. 899 (1972), aff'g in part, and rev'g in part, 54 T.C. 912 (1970); South Texas Rice Warehouse Co. v. Commissioner, 366 F.2d 890 (5th Cir. 1966), aff'g 43 T.C.

540 (1965), cert. denied, 386 U.S. 1016 (1967).

By contrast, the fact that unrelated parties engage in a transaction does not by itself evidence the type of control necessary to satisfy the “acting in concert or with a common goal or purpose” requirement of section 1.482–1(i)(4), regardless of whether such transaction may be viewed as having arbitrarily shifted income between the otherwise unrelated parties. An application of section 1.482–1(i)(4) to this type of situation would be inconsistent with the policies underlying section 482, which provides for allocations between or among organizations, trades or businesses “owned or controlled directly or indirectly by the same interests.”

Under the facts, the lease stripping transaction occurred among parties that themselves were unrelated to one another up to and including the time the income is stripped from the leases. Up to and including the time the income is stripped from the leases, there were not two or more of such parties and another organization, trade or business which such parties acted in concert to control. Accordingly, at that time, the parties did not “act in concert or with a common goal or purpose” within the meaning of section 1.482–1(i)(4).

HOLDING

The facts described up to and including the time the income is stripped from the leases do not support the application of section 482 to allow the allocation among the parties of the income and deductions arising from the property that is the subject of the lease stripping transaction. The fact that parties that were unrelated up to and including the time of a transaction engage in that transaction in an attempt to arbitrarily shift income or deductions among themselves does not by itself evidence the type of control necessary to satisfy the “acting in concert or with a common goal or purpose” requirement of section 1.482–1(i)(4). This ruling does not address whether A is considered to control E for purposes of the application of section 482 by reason of A and D entering into the purported section 351 transaction with E.

No inference is intended concerning the treatment of lease stripping transactions for federal income tax purposes. The Internal Revenue Service will challenge

August 25, 2003 387 2003-34 I.R.B.

163(a), and whether the deduction is disallowed under section 163(1), when a corporation issues units, each consisting of instruments in the form of a note and a forward contract to purchase a quantity of the corporation’s common stock. The holding of the revenue ruling is modified for units issued on or before August 22, 2003. See Rev. Rul. 2003-97, page 380.

Obsolete revenue rulings. This ruling publishes a list of previously published rulings that have been identified as no longer determinative with respect to future transactions.

Rev. Rul. 2003–99

The Internal Revenue Service is continuing its program of reviewing rulings (including revenue rulings, revenue procedures, and notices) published in the Internal Revenue Bulletin to identify and publish lists of those rulings that, although not specifically revoked or superseded, are no longer considered determinative because (1) the applicable statutory provisions or regulations have been changed or repealed; (2) the ruling position is specifically covered by statute, regulations, or subsequent

published position; or (3) the facts set forth no longer exist or are not sufficiently described to permit clear application of the current statute and regulations.

This revenue ruling publishes a list of rulings that have been identified under the Service's review program as no longer being determinative. The rulings are categorized by the Associate Chief Counsel offices that have primary jurisdiction over the subject matter of the rulings being obsoleted.

Accordingly, the rulings listed below are hereby declared obsolete.

Associate Chief Counsel (Income Tax and Accounting)

Ruling No. C.B. Citation

Rev. Rul. 70–286 1970–1 C.B. 113

Rev. Proc. 68–41 1968–2 C.B. 943

Notice 95–50 1995–2 C.B. 333

Associate Chief Counsel (Passthroughs and Special Industries)

Ruling No. C.B. Citation

Rev. Rul. 77–405 1977–2 C.B. 381

Rev. Rul. 79–29 1979–1 C.B. 358

Rev. Proc. 89–12 1989–1 C.B. 798

Rev. Proc. 91–13 1991–1 C.B. 477

Rev. Proc. 92–33 1992–1 C.B. 782

Rev. Proc. 92–35 1992–1 C.B. 790

Rev. Proc. 92–88 1992–1 C.B. 496

Rev. Proc. 94–46 1994–2 C.B. 688

Rev. Proc. 95–10 1995–1 C.B. 501

Associate Chief Counsel (Corporate)

Ruling No. C.B. Citation

Rev. Rul. 54–139 1954–1 C.B. 105

Rev. Rul. 54–396 ¹ 1954–2 C.B. 147

Rev. Rul. 56–128 1956–1 C.B. 442

Rev. Rul. 56–160 1956–1 C.B. 633

Rev. Rul. 56–212 1956–1 C.B. 170

Rev. Rul. 56–220 1956–1 C.B. 191

Rev. Rul. 56–271 1956–1 C.B. 440

1 Rev. Rul. 54–396 was declared obsolete by T.D. 8885, 2000–1 C.B. 1260, 1261, and is included in this ruling to allow easier confirmation of its obsolete status.

2003-34 I.R.B. 388 August 25, 2003

Associate Chief Counsel (Corporate)

Ruling No. C.B. Citation

Rev. Rul. 56–344 1956–2 C.B. 195

Rev. Rul. 56–448 1956–2 C.B. 130

Rev. Rul. 56–451 1956–2 C.B. 208

Rev. Rul. 56–586 1956–2 C.B. 214

Rev. Rul. 56–680 1956–2 C.B. 597

Rev. Rul. 56–681 1956–2 C.B. 597

Rev. Rul. 57–296 1957–2 C.B. 234

Rev. Rul. 58–92 1958–1 C.B. 174

Rev. Rul. 59–108 1959–1 C.B. 72

Rev. Rul. 59–120 1959–1 C.B. 74

Rev. Rul. 59–122 1959–1 C.B. 230

Rev. Rul. 59–233 1959–2 C.B. 106

Rev. Rul. 59–326 1959–2 C.B. 197

Rev. Rul. 59–400 1959–2 C.B. 114

Rev. Rul. 59–412 1959–2 C.B. 108

Rev. Rul. 60–49 1960–1 C.B. 148

Rev. Rul. 60–246 1960–2 C.B. 462

Rev. Rul. 60–262 1960–2 C.B. 114

Rev. Rul. 61–96 1961–1 C.B. 68

Rev. Rul. 64–147 1964–1 C.B. 136

Rev. Rul. 64–177 1964–1 C.B. 141

Rev. Rul. 65–110 1965–1 C.B. 438

Rev. Rul. 66–23 ² 1966–1 C.B. 67

Rev. Rul. 66–290 1966–2 C.B. 112

Rev. Rul. 67–186 1967–1 C.B. 81

Rev. Rul. 67–189 1967–1 C.B. 255

Rev. Rul. 67–326 1967–2 C.B. 143

Rev. Rul. 68–388 1968–2 C.B. 122

Rev. Rul. 68–434 1968–2 C.B. 137

Rev. Rul. 69–18 1969–1 C.B. 188

Rev. Rul. 69–20 1969–1 C.B. 202

Rev. Rul. 69–241 1969–1 C.B. 200

Rev. Rul. 69–426 1969–2 C.B. 48

Rev. Rul. 70–6 1970–1 C.B. 172

Rev. Rul. 70–111 1970–1 C.B. 184

Rev. Rul. 70–378 1970–2 C.B. 178

2 Rev. Rul. 66–23 was declared obsolete by T.D. 8760, 1998–1 C.B. 803, 805, and is included in this ruling to allow easier confirmation of its obsolete status.

August 25, 2003 389 2003-34 I.R.B.

Associate Chief Counsel (Corporate)

Ruling No. C.B. Citation

Rev. Rul. 70–409 1970–2 C.B. 79

Rev. Rul. 70–496 1970–2 C.B. 74

Rev. Rul. 71–384 1971–2 C.B. 181

Rev. Rul. 71–440 1971–2 C.B. 326

Rev. Rul. 72–61 1972–1 C.B. 281

Rev. Rul. 72–212 1972–1 C.B. 291

Rev. Rul. 72–472 1972–2 C.B. 202

Rev. Rul. 72–603 1972–2 C.B. 517

Rev. Rul. 73–257 1973–1 C.B. 189

Rev. Rul. 73–277 1973–1 C.B. 296

Rev. Rul. 73–473 1973–2 C.B. 115

Rev. Rul. 73–490 1973–2 C.B. 110

Rev. Rul. 73–498 1973–2 C.B. 316

Rev. Rul. 74–73 1974–1 C.B. 254

Rev. Rul. 74–87 1974–1 C.B. 72

Rev. Rul. 74–211 1974–1 C.B. 76

Rev. Rul. 74–476 1974–2 C.B. 104

Rev. Rul. 74–610 1974–2 C.B. 288

Rev. Rul. 75–54 1975–1 C.B. 293

Rev. Rul. 75–160 1975–1 C.B. 112

Rev. Rul. 75–174 1975–1 C.B. 252

Rev. Rul. 75–179 1975–1 C.B. 103

Rev. Rul. 75–212 1975–1 C.B. 107

Rev. Rul. 75–248 1975–1 C.B. 125

Rev. Rul. 75–468 1975–2 C.B. 115

Rev. Rul. 75–515 1975–2 C.B. 117

Rev. Rul. 75–561 1975–2 C.B. 129

Rev. Rul. 76–90 1976–1 C.B. 101

Rev. Rul. 76–239 1976–1 C.B. 90

Rev. Rul. 76–347 1976–2 C.B. 253

Rev. Rul. 77–81 1977–1 C.B. 97

Rev. Rul. 77–150 1977–1 C.B. 88

Rev. Rul. 77–256 1977–2 C.B. 96

Rev. Rul. 77–284 1977–2 C.B. 97

Rev. Rul. 77–321 1977–2 C.B. 98

Rev. Rul. 77–456 1977–2 C.B. 102

Rev. Rul. 77–483 1977–2 C.B. 244

2003-34 I.R.B. 390 August 25, 2003

Associate Chief Counsel (Corporate)

Ruling No. C.B. Citation

Rev. Rul. 78–89 1978–1 C.B. 272

Rev. Rul. 78–287 1978–2 C.B. 146

Rev. Rul. 78–441 1978–2 C.B. 152

Rev. Rul. 79–71 1979–1 C.B. 151

Rev. Rul. 79–82 1979–1 C.B. 141

Rev. Rul. 79–104 1979–1 C.B. 263

Rev. Rul. 79–314 1979–2 C.B. 132

Rev. Rul. 80–79 1980–1 C.B. 191

Rev. Rul. 80–101 1980–1 C.B. 70

Rev. Rul. 80–358 1980–2 C.B. 110

Rev. Rul. 81–190 1981–2 C.B. 84

Rev. Rul. 81–247 1981–2 C.B. 87

Rev. Rul. 82–164 1982–2 C.B. 77

Rev. Rul. 83–119 1983–2 C.B. 57

Rev. Rul. 84–30 1984–1 C.B. 114

Rev. Rul. 85–55 1985–1 C.B. 323

Rev. Rul. 85–136 1985–2 C.B. 194

Rev. Rul. 86–52 1986–1 C.B. 204

Rev. Rul. 87–1 1987–1 C.B. 132

Rev. Proc. 91–11 1991–1 C.B. 470

Rev. Proc. 91–39 1991–2 C.B. 694

Rev. Proc. 95–11 1995–1 C.B. 505

Rev. Proc. 95–39 1995–2 C.B. 399

Associate Chief Counsel (International)

Ruling No. C.B. Citation

Rev. Rul. 56 1953–1 C.B. 303

Rev. Rul. 55–105 1955–1 C.B. 94

Rev. Rul. 55–372 1955–1 C.B. 339

Rev. Rul. 57–116 1957–1 C.B. 245

Rev. Rul. 57–542 1957–2 C.B. 462

Rev. Rul. 58–618 1958–2 C.B. 430

Rev. Rul. 59–356 1959–2 C.B. 177

Rev. Rul. 60–307 1960–2 C.B. 214

Rev. Rul. 63–157 1963–2 C.B. 296

Rev. Rul. 63–224 1963–2 C.B. 297

Rev. Rul. 63–248 1963–2 C.B. 623

August 25, 2003 391 2003-34 I.R.B.

Associate Chief Counsel (International)

Ruling No. C.B. Citation

Rev. Rul. 64–285 1964–2 C.B. 184

Rev. Rul. 65–260 1965–2 C.B. 243

Rev. Rul. 65–273 1965–2 C.B. 240

Rev. Rul. 66–4 1966–1 C.B. 177

Rev. Rul. 68–309 1968–1 C.B. 338

Rev. Rul. 68–477 1968–2 C.B. 317

Rev. Rul. 68–522 1968–2 C.B. 320

Rev. Rul. 68–608 1968–2 C.B. 309

Rev. Rul. 68–640 1968–2 C.B. 321

Rev. Rul. 68–641 1968–2 C.B. 325

Rev. Rul. 69–361 1969–1 C.B. 193

Rev. Rul. 69–485 1969–2 C.B. 158

Rev. Rul. 69–517 1969–2 C.B. 149

Rev. Rul. 70–229 1970–1 C.B. 164

Rev. Rul. 70–230 1970–1 C.B. 166

Rev. Rul. 70–264 1970–1 C.B. 165

Rev. Rul. 71–13 1971–1 C.B. 217

Rev. Rul. 71–453 1971–2 C.B. 292

Rev. Rul. 71–454 1971–2 C.B. 294

Rev. Rul. 71–495 1971–2 C.B. 311

Rev. Rul. 71–518 1971–2 C.B. 293

Rev. Rul. 71–565 1971–2 C.B. 266

Rev. Rul. 71–582 1971–2 C.B. 274

Rev. Rul. 72–116 1972–1 C.B. 220

Rev. Rul. 72–357 1972–2 C.B. 456

Rev. Rul. 72–526 1972–2 C.B. 450

Rev. Rul. 72–599 1972–2 C.B. 458

Rev. Rul. 73–46 1973–1 C.B. 342

Rev. Rul. 73–119 1973–1 C.B. 348

Rev. Rul. 73–182 1973–1 C.B. 350

Rev. Rul. 74–6 1974–1 C.B. 191

Rev. Rul. 74–59 ³ 1974–1 C.B. 183

Rev. Rul. 74–83 1974–1 C.B. 184

Rev. Rul. 74–376 1974–2 C.B. 215

Rev. Rul. 74–521 1974–2 C.B. 208

Rev. Rul. 75–53 1975–1 C.B. 234

3 Rev. Rul. 74–59 was declared obsolete by T.D. 8708, 1997–1 C.B. 137, 139, and is included in this ruling to allow easier confirmation of its obsolete status.

2003-34 I.R.B. 392 August 25, 2003

Associate Chief Counsel (International)

Ruling No. C.B. Citation

Rev. Rul. 75–105 1975–1 C.B. 29

Rev. Rul. 75–106 1975–1 C.B. 31

Rev. Rul. 75–107 1975–1 C.B. 32

Rev. Rul. 75–111 1975–1 C.B. 251

Rev. Rul. 75–134 1975–1 C.B. 33

Rev. Rul. 75–298 1975–2 C.B. 290

Rev. Rul. 75–341 1975–2 C.B. 308

Rev. Rul. 75–426 1975–2 C.B. 292

Rev. Rul. 76–44 1976–1 C.B. 127

Rev. Rul. 76–67 1976–1 C.B. 208

Rev. Rul. 76–329 1976–2 C.B. 223

Rev. Rul. 76–535 1976–2 C.B. 219

Rev. Rul. 77–41 1977–1 C.B. 226

Rev. Rul. 77–343 1977–2 C.B. 255

Rev. Rul. 77–482 1977–2 C.B. 242

Rev. Rul. 79–116 1979–1 C.B. 213

Rev. Rul. 79–424 1979–2 C.B. 405

Rev. Rul. 80–78 1980–1 C.B. 171

Rev. Rul. 80–167 1980–1 C.B. 176

Rev. Rul. 80–170 1980–1 C.B. 285

Rev. Rul. 82–226 1982–2 C.B. 156

Rev. Rul. 83–101 1983–2 C.B. 147

Rev. Rul. 84–28 1984–1 C.B. 177

Rev. Rul. 88–7 1988–1 C.B. 269

Rev. Rul. 89–72 1989–1 C.B. 257

Rev. Proc. 68–23 1968–1 C.B. 821

Rev. Proc. 90–19 1990–1 C.B. 495

Notice 87–5 1987–1 C.B. 416

Notice 87–66 1987–2 C.B. 376

Notice 94–46 1994–1 C.B. 356

revenue ruling, contact the following persons from the appropriate Associate Chief Counsel offices (not a toll-free call):

The Service will continue to review other rulings to ascertain those that, for the reasons stated above, are inapplicable to future transactions. Therefore, failure to include any particular ruling in the above list should not be construed as an indication that the ruling necessarily is determinative with respect to future transactions.

DRAFTING INFORMATION

The principal author of this revenue ruling is Marnette Myers of the Office of Associate Chief Counsel (Income Tax and Accounting). For further information regarding the rulings obsoleted in this

August 25, 2003 393 2003-34 I.R.B.

Name Associate Chief Counsel Telephone No.

Marnette Myers Income Tax and Accounting (202) 622–4920

Louis Solomon Passthroughs and Special Industries (202) 622–3010

Wayne Murray Corporate (202) 622–7700

Kelly Myers Kogan International (202) 622–3810

2003-34 I.R.B. 394 August 25, 2003