SECTION 1. PURPOSE

This notice announces those circumstances under which a consolidated group that owns stock of an includible corporation will be treated as satisfying the value requirement of § 1504(a)(2)(B) of the Internal Revenue Code for certain purposes. It also announces the intention of the Internal Revenue Service and the Treasury Department to propose regulations pursuant to § 1504(a)(5)(C) providing that the value requirement will be treated as satisfied if the affiliated group, in reliance on a good faith determination of value, treated such requirement as satisfied. In addition, pursuant to § 1504(a)(5)(D), the proposed regulations will disregard an inadvertent ceasing to satisfy the value requirement by reason of changes in relative values of different classes of stock. This notice describes the issues that the Service and the Treasury Department are studying and invites comments on those issues.