Rev. Rul. 69-245

The taxpayer, a United States person (as defined in section 4920(a)(4) of the Internal Revenue Code of 1954), entered into an option agreement with X, a Canadian corporation. The taxpayer was granted an option (as defined in section 4920(a)(2)(E) of the Code) to purchase a certain number of common shares of the capital stock of X if the taxpayer purchased a certain quantity of raw materials from X. The option agreement was dated January 1, 1968. On March 5, 1968, the taxpayer became entitled to exercise the option, having met the requirements to do so under the option agreement.

Section 147.4-1(c)(ii) of the Temporary Regulations provides that with respect to acquisitions occurring on or after June 25, 1965, the Form 3779 shall be filed not before the date of such acquisition but on or before the last day of the month following the month in which such acquisition occurs.

Held, the date of acquisition of the option to acquire the stock of X is March 5, 1968, since it was not until this date that the taxpayer had the unconditional right to exercise the option and acquire the stock.

Since the acquisition of stock through the exercise of an option is subject to the interest equalization tax as a separate transaction, if the option is exercised and the stock of X is acquired by the taxpayer, a separate Form 3779 must be filed pursuant to section 147.4-1(c) of the regulations in order for the taxpayer to secure the exclusion from the interest equalization tax provided by section 4917 of the Code with respect to such acquisition of the stock of X.