SECTION 7. SALE OR EXCHANGE

BY A TAXPAYER OF QUALIFIED PREFERRED STOCK THE BASIS OF WHICH IN THE TAXPAYER’S HANDS IS DETERMINED BY REFERENCE TO THE BASIS OF THAT STOCK IN THE HANDS OF THE PERSON THAT HAD TRANSFERRED IT TO THE TAXPAYER

.01 Scope . This section applies if all of the following are satisfied:

(1) The taxpayer acquired QPS after September 6, 2008 (the Acquisition);

(2) The Acquisition was a transaction in which the taxpayer’s basis in the QPS was determined by reference to the basis of the QPS in the hands of the person (the Transferor) that transferred the QPS to the taxpayer (that is, the QPS is “transferred basis property” within the meaning of section 7701(a)(43) of the Code); (3) The Transferor held the QPS on September 6, 2008; and

(4) On September 6, 2008, and at all times thereafter until the QPS was transferred to the taxpayer, if the Transferor had sold the QPS, the character of gain or loss on the sale would have been governed by EESA § 301, either because the Transferor was an applicable financial institution for that entire time period or because the sale would have been described in Section 6.01(2) of this revenue procedure.

.02 Application . Solely for purposes of EESA § 301, the taxpayer is treated as having held on September 6, 2008, the QPS that it acquired in the Acquisition.

November 24, 2008 1198 2008–47 I.R.B.