Rev. Rul. 73-499

X, a domestic manufacturing corporation, required funds for its foreign operations. To accomplish this, X, pursuant to section 4912(c) of the Internal Revenue Code of 1954, properly elected to have a certain issue of its debt obligations, which were to be used to acquire funds for its foreign operations, treated as debt obligations of a foreign obligor. Some of these debt obligations are convertible into X's stock.

Section 4912(b)(3) of the Code provides, in part, that the acquisition of stock or a debt obligation of a domestic corporation, formed or availed of for the principal purpose of obtaining funds (directly or indirectly) for a foreign issuer or obligor, shall be deemed an acquisition (from such foreign issuer or obligor) of stock or a debt obligation of such foreign issuer or obligor.

Held, the mere fact that X elected to have a certain issue of its debt obligations treated as debt obligations of a foreign obligor does not by itself make X "formed or availed of" within the meaning of section 4912(b)(3) of the Code. Therefore, provided X is not otherwise "formed or availed of", acquisitions by United States persons of stock of X (whether or not issued on the conversion of the proposed debt obligations) will not be deemed acquisitions of stock of a foreign issuer within the meaning of section 4912(b)(3), and acquisitions by United States persons of debt obligations of X, other than those to which an election under section 4912(c) pertains, will not be deemed acquisitions of debt obligations of a foreign obligor within the meaning of section 4912(b)(3).