Rev. Rul. 73-9

Advice has been requested whether, under the circumstances described below, an acquisition by a United States person of the stock of a foreign corporation will be subject to the interest equalization tax pursuant to section 4911 of the Internal Revenue Code of 1954.

X, a foreign corporation, was authorized under its Articles of Incorporation to issue 1,000x shares of stock in nominative or bearer form. The 1,000x shares of stock were the only shares of stock authorized to be issued by X under its articles of incorporation. All such shares were issued and outstanding prior to the X's latest record date before July 19, 1963. The shares in bearer or nominative form were identical with respect to the rights and interests in the control, profits, and assets of X.

The latest record date before July 19, 1963, with respect to the nominative shares issued and outstanding was October 22, 1962. With respect to the bearer shares issued and outstanding for which record ownership was established, X's latest record date before July 19, 1963, was October 18, 1962, at the annual meeting. At such meeting a list was prepared identifying the bearer shareholders.

Record ownership by United States persons on the applicable records dates prior to July 19, 1963, was established for more than 65 percent of the shares of stock.

Section 4920(b)(1) of the Code provides, in part, that a foreign corporation (other than a company registered under the Investment Company Act of 1940) shall not be considered a foreign issuer with respect to any class of its stock if as of the corporation's latest record date before July 19, 1963, more than 65 percent of such class of stock was held of record by United States persons.

Section 4920(b)(2) of the Code defines the term "class of stock" to mean all shares of stock of a corporation issued and outstanding as of the corporation's latest record date before July 19, 1963, which are identical with respect to the rights and interests such shares represent in the control, profits, and assets of the corporation. The latest record date before July 19, 1963, is defined in the Temporary Regulations, section 147.7-2(c)(4), as the latest date as of which record ownership of the stock of the foreign corporation was determined by such corporation, whether for the declaration of dividends or for other corporate purposes.

Accordingly, it is held that X is not a foreign issuer with respect to its shares of stock presently issued and outstanding. Therefore, acquisition by United States persons of the shares will be exempt from the interest equalization tax.