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May 11 — The IRS won't challenge “triple drop and check” deals that took place before it issued two rulings permitting tax-free treatment of the transactions, an agency official said.
In the May 5 guidance, the Internal Revenue Service revoked Revenue Ruling 78-130, which would have precluded that treatment for deals involving transfers of stock to a series of subsidiaries followed by a reorganization.
IRS Deputy Associate Chief Counsel (Corporate) Alison Burns said because the agency decided Rev. Rul. 78-130 was incorrect, “it would be pretty difficult for us to go back and challenge transactions that were in line with the thinking that 78-130 was wrong. I'm unlikely to be setting up those cases.”
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