Rev. Rul. 69-22

In 1967, the taxpayer, an individual who is a United States person within the meaning of section 4920(a)(4) of the Internal Revenue Code of 1954, became the beneficiary of the estate of a resident of a foreign country. The estate assets, which were located in the foreign country, consisted of stocks of foreign corporations. After distribution of the inherited stocks to him and prior to the physical transfer of the inherited stocks to the United States, the taxpayer sold them and used the proceeds to purchase stock of another foreign corporation.

Held, although the acquisition of the foreign stocks by inheritance, in the instant case, is exempt from the interest equalization tax under section 4914(a)(3) of the Code, that exemption does not extend to the purchase of foreign stock by the taxpayer with the proceeds from the sale of the inherited stocks. Therefore, if the acquisition of the purchased stock is not exempt from the interest equalization tax under some other provision of the Code, the acquisition of such stock is subject to the interest equalization tax imposed by section 4911 of the Code.