Pub. 1 2019 Issue 5

11 nebraska society of cpas W W W . N E S C P A . O R G For more information, contact Jeff Schaffart or Kurt Tjaden at Koley Jessen at jeff.schaffart@koleyjessen . com or kurt.tjaden@koleyjessen.com , respectively. Schaffart solves complex tax and legal issues by provid- ing timely, pragmatic advice to private equity sponsors, general counsel, management teams, and business owners. Tjaden advises individual and business clients on tax, estate, and business succession planning; tax controversies; and general corporate matters. Under the Rev. Proc. 2017-52 ruling program, in addition to significant issue ruling requests, a taxpayer may request a “transactional ruling” that addresses the general federal income tax consequences of a “covered transaction.” A covered transaction is a transaction intended to qualify under sections 368(a)(1)(D) and 355, or a distribution intended to qualify under section 355(a) or section 355(c). Although transactional rulings for section 355 distributions are now available, Rev. Proc. 2017-52 does not alter the IRS’ policy that limits rulings on the device prohibition under section 355(a)(1)(B) and regulation section 1.355-2(d), the business purpose requirement under regulation section 1.355-2(d), and whether a distribution is pursuant to a plan under section 355(e). When submitting a Rev. Proc. 2017-52 ruling request, a taxpayer must include a description of the restructuring as well as any other transaction that is part of the restructuring. A taxpayer must also generally make all the representations outlined in the appendix to Rev. Proc. 2017-52. Ot he r recent favorable sec t ion 355 developments include Rev. Rul. 2019-9 that suspended two previous IRS rulings and announced a study on the active conduct of a trade or business (ATB) requirement under section 355(a)(1)(C) and section 355(b). The ATB analysis underlying the holdings in Rev. Rul. 57-464 and Rev. Rul. 57-492 focused on the lack of income generated by the activities. Consequently, this could expand the opportunity for certain corporations, especially those that are “pre-income,” such as research and development companies, to engage in a section 355 distribution. Conclusion The ruling program under Rev. Proc. 2017-52 is a welcome development for taxpayers considering a potential section 355 distribution because a transactional ruling can now provide a great deal of certainty that the IRS will respect the tax-free nature of the distribution. Koley Jessen has an active corporate and tax practice and has obtained letter rulings under the current ruling program. In our experience, the IRS has issued favorable letter rulings under Rev. Proc. 2017-52 within approximately six months from the date of submission. t