Rev. Rul. 72-310

P, a "participating firm" as defined in section 4918(c) of the Internal Revenue Code of 1954, transferred, under a transfer and assumption agreement, its United States broker and dealer business to a newly formed wholly owned subsidiary, S, that also became qualified as a "participating firm" and is now a member of the National Association of Securities Dealers. P included in the transfer all books and records maintained by it in its capacity as a "participating firm" and all stocks and debt obligations which it held for its customers. S has agreed to assume any liabilities that may have been incurred by P as a participating firm under subtitles D and F of the Code, as amended, relating, in part, to Interest Equalization Tax (IET) and to Procedure and Administration. Subsequent to such transfer, P notified the Commissioner of Internal Revenue of its intention to have its status as a "participating firm" terminated. It is anticipated that S will receive requests to sell foreign securities with respect to which a prior section 4918 exemption was established or the IET was paid, that were purchased by P for United States persons and which were either held by P for such persons or were delivered to them prior to the date of the transfer and assumption agreement. With respect to the sale of such foreign securities to a United States person, the records transferred from P to S clearly will indicate whether P (if P had continued as a participating firm) could have issued a written comparison or broker-dealer confirmation, within the requirements of section 4918(e) of the Code. S will maintain in its possession a "United States Person Ownership Certificate" for each United States person that had such a certificate on file with P at the time the transfer and assumption agreement became effective.

Held, for purposes of section 4918(e) of the Code, S is authorized to issue any "broker-dealer confirmation" or "written comparison" that P would have been able to issue if P had retained its status as a participating firm, provided S continues to hold itself liable for any liabilities which P incurred as broker, dealer, and participating firm.