Rev. Rul. 54-269

Advice is requested as to whether M Corporation, incorporated under special acts of the Connecticut Legislature, and reincorporated under the general corporation laws of that State, is after such reincorporation to be considered, for Federal income tax purposes, as a continuation of the same corporation or as a new and separate taxable entity.

Section 1052b, 1951 Supplement of the General Statutes of the State of Connecticut, provides in part as follows:

Any corporation of this state heretofore or hereafter incorporated by special act for any of the purposes permitted by section 5151 may surrender its charter and subject itself to, and have the benefits of, the provisions of this chapter and continue in existence and operation as if organized thereunder, upon its filing in the office of the secretary of the state in the manner required by the provisions of section 5135 the certificate hereinafter provided. Such certificate shall be made by a majority of the directors and shall set forth: (1) A statement that the surrender of the special charter of such corporation and the adoption of the provisions of this chapter were duly approved by vote of a majority of the total number of shares of the issued and outstanding capital stock of each class at a meeting called to consider such change; (2) the act of the legislature by or under which the corporation was created; (3) the information required by section 5152 to be included in a certificate of incorporation. A copy of such certificate duly certified by the secretary of the state shall be filed in the office of the town clerk of the town where such corporation is located. Upon the filing of such certificate with the town clerk, such corporation shall thereafter continue its corporate existence under this chapter and no longer have either the privileges or obligations of the act or acts under which it was originally incorporated * * *.

The facts in the instant case are distinguishable from those considered in G.C.M. 27080, C.B. 1952-1, 41. There, a corporation had been organized under the laws of a certain State, its corporate life being fixed by its charter to 30 years. A short time after the expiration of the 30-year period a new corporation was organized under the laws of the same State with the same name and the same capital structure. The assets of the old corporation were conveyed to the new corporation in exchange for the capital stock of the latter, and the stock of the new was issued to the stockholders of the old in the same proportion as their stockholding in that corporation. Following the principle set forth in New Colonial Ice Co., Inc. v. Helvering , 292 U.S. 435, Ct. D. 841, C.B. XIII-1, 194 (1934), and Weber Flour Mill Co. v. Commissioner , 82 Fed.(2d) 764, G.C.M. 27080, supra , holds that, for Federal income tax purposes, the two corporations should be treated as two distinct entities and they were required to file separate Federal income tax returns.

In addition to the mentioned distinction between the factual situation in the present case and the one involved in G.C.M. 27080, supra , it is also to be observed that G.C.M. 24423, C.B. 1945, 145, however, holds that a new taxable entity was not created upon the conversion of a State bank into a National bank pursuant to section 35, title 12, United States Code, and that only one Federal income tax return was required for the entire taxable year. The issue was found to be dependent upon an interpretation of the section of law pursuant to which the conversion was accomplished.

In the facts of the instant case the Connecticut statute is regarded as similarly controlling. The language of such statute is very specific in providing for the continuation of the corporation solely by the surrender of its charter and the filing of the required certificate and certain other information. Accordingly, it is held that, since the M Corporation was reincorporated pursuant to the provisions of section 1052b, 1951 Supplement of the General Statutes of the State of Connecticut, such corporation under the new charter is considered, for Federal income tax purposes, as a continuation of the same corporation, and not as a new taxable entity.