Rev. Proc. 64-31

SECTION 1. PURPOSE.

The purpose of this Revenue Procedure is to supersede Revenue Procedure 62-32, C.B. 1962-2, 527, Revenue Procedure 63-20, C.B. 1963-2, 754, and to set forth an up-to-date, section-by-section list of those areas of the Internal Revenue Code of 1954 in which the Internal Revenue Service will not issue advance rulings or determination letters.

SEC. 2. BACKGROUND.

It is the policy of the Service to answer inquiries of individuals and organizations, whenever appropriate in the interest of sound tax administration, as to their status for tax purposes and as to the tax effects of their acts or transactions, prior to their filing of returns or reports as required by the revenue laws.

There are, however, certain areas where, because of the inherently factual nature of the problems involved, or for other reasons, the Service will not issue advance rulings or determination letters. These areas are set forth in two sections of this Revenue Procedure. Section 3 reflects those areas in which advance rulings and determinations will not be issued. Section 4 sets forth those areas in which they will not ordinarily be issued. Each section reflects a number of specific questions and problems as well as the general areas.

With respect to the items listed, Revenue Rulings or Revenue Procedures may be published in the Internal Revenue Bulletin from time to time to provide general guidelines as to the position of the Service.

This list should not be considered as all inclusive. The elimination of items previously described in Revenue Procedure 62-32 should not be construed as meaning that the Service will rule on those items, but merely that the Service will consider such requests and may decline to rule in advance on any question whenever warranted by the facts and circumstances, particularly where it is not clear to the Service that the parties to the transaction are dealing at arms length. Whenever a particular item is added to or deleted from the list, appropriate notice thereof will be published in the Internal Revenue Bulletin.

The authority and general procedures of the National Office of the Internal Revenue Service and of the Offices of the District Directors of Internal Revenue with respect to the issuance of advance rulings and determination letters are outlined in Revenue Procedure 62-28, C.B. 1962-2, 496.

SEC. 3. AREAS IN WHICH RULINGS WILL NOT BE ISSUED.

.01 Specific questions and problems.

1. Section 162.--Trade or Business Expenses.--Whether compensation is reasonable in amount.

2. Section 163.--Interest.--Whether advances to thin corporations constitute loans or are equity investments.

3. Section 264(b).--Certain Amounts Paid in Connection with Insurance Contracts.--Whether "substantially all" the premiums of a contract of insurance are paid within a period of four years from the date on which the contract is purchased. Also, whether an amount deposited is in payment of a "substantial number" of future premiums on such a contract.

4. Section 269.--Acquisition Made to Evade or Avoid Income Tax.--Whether an acquisition is within the meaning of section 269.

5. Section 302.--Redemption of Stock.--(a) Whether section 302(b) applies where the consideration given in redemption by the corporations consists entirely or partly of its notes payable, and the shareholder's stock is held in escrow or as security for payment of the notes with the possibility that the stock may or will be returned to him in the future, upon the happening of specified defaults by the corporation.

(b) The tax effect of the redemption of stock for notes, or the liquidation of a corporation by a series of distributions, where the distributions in liquidation or the payments on the notes are to be made over a long future period.

6. Sections 311 and 336.--Taxability of Corporation on Distribution; General Rule.--Upon distribution of property in kind by a corporation to its shareholders, in complete liquidation under section 331 (where under the facts a sale of the property by the corporation would not qualify under section 337), in partial liquidation under section 346, or in redemption of stock under section 302(a), followed by a sale of the property, whether the sale can be deemed to have been made by the corporation under the doctrine of Commissioner v. Court Holding Company, 324 U.S. 331, Ct.D. 1636, C.B. 1945, 58.

7. Section 331.--Gain or Loss to Shareholders in Corporate Liquidations.--The tax effect of the liquidation of a corporation, preceded or followed by the reincorporation of all or a part of the business and assets, where the shareholders of the liquidating corporation own more than a nominal amount of the stock of the new transferee corporation; or where a liquidation is followed by the sale of the corporate assets by the shareholders to another corporation in which such shareholders own more than a nominal amount of the stock.

8. Section 337.--Gain or Loss; Certain Liquidations.--The application of this section to gains realized by a corporation upon the sale of property, in connection with its liquidation, to another corporation, where more than a nominal amount of the stock of both the selling corporation and the purchasing corporation are owned by the same persons.

9. Section 346.--Partial Liquidation.--The amount of working capital attributable to the business or portion of the business terminated which may be distributed in partial liquidation.

10. Section 351.--Transfer to Controlled Corporation.--(a) What will constitute stock or securities where part of the consideration received by the transferors consists of bond, debentures or long-term notes of the transferee in an amount, which when compared to the capital stock of the corporation, gives rise to the question of a "thin corporation."

(b) Whether the transfer of appreciated stocks or securities to a newly organized investment company in exchange for shares of the stock of such investment company, as a result of solicitation by promoters, brokers or investment houses, will constitute nontaxable exchanges within the meaning of this section.

(c) Whether the transfer of appreciated real estate, or interests therein, to a newly organized real estate investment trust, within the meaning of section 856(a) of the Code, in exchange for shares or interests in such trust, as a result of solicitation by promoters, brokers, or investment houses, will constitute nontaxable exchanges within the meaning of this section.

11. Section 368.--Definitions Relating to Reorganizations.--Whether this section is applicable to the acquisition by an investment company of the stock or assets of another investment company where, as a result of such acquisition, the stockholders of either company, or both companies, thereby achieve a substantially wider diversification of the investment assets underlying their stock holdings.

12. Section 401.--Qualified Pension, Profit-Sharing, and Stock Bonus Plans.--(a) Amendments to qualified profit-sharing and stock bonus plans merely removing definite contribution formula. (These do not affect qualification; advance determination letters are unnecessary. See Rev. Proc. 56-22, C.B. 1956-2, 1380.)

(b) Amendments to qualified pension and profit-sharing plans designed only to permit such plants to participate in a common pension fund or group trust. (These do not affect qualification; advance determination letters are unnecessary. See Rev. Proc. 56-42, C.B. 1956-2, 1409.)

(c) Profit-sharing plans weighted by units of retirement benefits. See Rev. Rul. 57-77, C.B. 1957-1, 158.

13. Section 453.--Revolving Credit Sales as Installment Sales.--Whether a proposed sampling procedure will be acceptable by the Internal Revenue Service for the purpose of determining the portion of revolving credit balances appropriately to be treated as installment account balances. See Rev. Proc. 64-4, C.B. 1964-1 (Part 1), 644.

14. Section 642(c).--Deduction for Amounts Paid or Permanently Set Aside for a Charitable Purpose.--Allowance of an unlimited deduction for amounts set aside by a trust or estate for charitable purposes where there is a possibility that the corpus of the estate of trust may be invaded.

15. Section 704(e).--Family Partnership.--Matters relating to the validity of a family partnership where capital is not a material income producing factor.

16. Section 1551.--Disallowance of Surtax Exemption and Accumulated Earnings Credit.--Whether a transfer is within section 1551 of the Code.

17. Section 2035.--Transactions in Contemplation of Death.--Whether a transaction is one in contemplation of death.

18. Section 7701.--Classification of a newly organized unincorporated investment organization as a trust, partnership, or an association taxable as a corporation, where there is a transfer of appreciated stocks or securities in exchange for an interest therein, as a result of solicitation by promoters, brokers or investment houses.

.02 General Areas.

1. The results of transactions which lack bona fide business purpose and have as their principal purpose the reduction of Federal taxes.

2. A matter upon which a court decision adverse to the Government has been handed down and the question of following the decision or litigating further has not yet been resolved.

3. A matter involving the prospective application of the estate tax to the property or the estate of a living person.

SEC. 4. AREAS IN WHICH RULINGS WILL NOT ORDINARILY BE ISSUED.

.01 Specific questions and problems.

1. Section 167.--Depreciation.

(a) Useful lives of assets.

(b) Depreciation rates.

2. Section 306.--Disposition of Certain Stock.--Whether the distribution or disposition or redemption of "section 306 stock" in a closely held corporation is in pursuance of a plan having as one of its principal purposes the avoidance of Federal income taxes within the meaning of section 306(b)(4).

3. Section 341.--Collapsible Corporations.--Whether a corporation will be considered as a "collapsible corporation," that is, whether it was "formed or availed of" with the view of certain tax consequences.

4. Section 351.--Transfers to Controlled Corporation.--The tax effect of the transfer where part of the consideration received by the transferors consists of bond, debentures or any other evidences of indebtedness of the transferee.

5. Section 401.--Qualified Pension, Profit-Sharing, and Stock Bonus Plans.--Whether a combination cash and trusteed profit-sharing plan qualifies. See Rev. Rul. 56-497, C.B. 1956-2, 284.

6. Section 503(c), (h) and (i).--Prohibited Transactions; Section 401(a) Trusts and Section 501(c)(3) Organizations.--Whether a transaction involving the application of Section 503(c), Section 503(h), or Section 503(i) of the Code will be considered a prohibited transaction or will otherwise affect the exempt status of a trust described in Section 401(a) or an organization described in Section 501(c)(3), except as provided in Section 5 of Revenue Procedure 62-30, C.B. 1962-2, 512, and Section 5 of Revenue Procedure 62-31, C.B. 1962-2, 517.

7. Section 1221.--Capital Assets.--Whether an individual is a dealer in real estate for the purpose of determining whether property held by him may be classified as a capital asset or as property held for sale to customers.

.02 General Areas.

1. Any other matter where the determination requested is primarily one of fact, e.g., market value of property.

2. The tax effect of any transaction to be consummated at some indefinite future time.

SEC. 5. SCOPE OF APPLICATION.

This Revenue Procedure is not to be considered as precluding the submission of requests for technical advice in any of the above areas from the office of a District Director of Internal Revenue to the National Office.

SEC. 6. EFFECT ON OTHER DOCUMENTS.

Revenue Procedure 62-32, C.B. 1962-2, 527, and Revenue Procedure 63-20, C.B. 1963-2, 754, are hereby superseded.