IRS Revenue Ruling
1997-44

Code Secs. 355, 7805

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26 CFR 1.355-2; Limitations.
(Also section 7805; 301.7805-1.)

Section 355. This ruling declares Rev. Rul. 70-225 obsolete because it
is no longer determinative following modifications made by the Taxpayer
Relief act of 1997, as amended by the Tax Technical Corrections act of
1998. Rev. Rul. 70-225 addresses a distribution of the stock of a newly
formed controlled corporation followed by an acquisition of the stock of
the controlled corporation. Rev. Rul. 70-225 obsoleted.


REV. RUL. 98-44

Rev. Rul. 70-225, 1970-1 C.B. 80, modified by Rev. Rul. 98-27, 1998-22
I.R.B. 4, addresses a distribution of the stock of a newly formed
controlled corporation followed by an acquisition of the stock of the
controlled corporation. Rev. Rul. 70-225 is no longer determinative
following enactment of section 1012 of the Taxpayer Relief Act of 1997,
Pub. L. No. 105-34, 111 Stat. 788, 914-18 (the "Act"), as amended in
section 6010(c) of the Tax Technical Corrections Act of 1998, Pub. L. No.
105-206, 112 Stat. 790, 813-14, which modified certain provisions in
sections 351, 355, and 368 of the Internal Revenue Code. Subject to
certain transition rules, section 1012(c) of the Act is effective for
transfers after August 5, 1997.

Accordingly, Rev. Rul. 70-225 is declared obsolete as of the effective
date of section 1012(c) of the Act.


DRAFTING INFORMATION

The principal author of this revenue ruling is Phoebe Bennett of the
Office of Assistant Chief Counsel (Corporate). For further information
regarding this revenue ruling, contact Ms. Bennett at (202) 622-7750 or
Brendan P. O'Hara at (202) 622-7530 (not toll-free calls).

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