Rev. Proc. 67-13

Revenue Procedure 66-34, C.B. 1966-2, 1232, sets forth operating rules that must be satisfied before a ruling will be issued in certain types of transactions. Section 3.3 thereof is amplified to read as follows:

In reorganizations under sections 368(a)(1)(A), 368(a)(1)(B) and 368(a)(1)(C) of the Internal Revenue Code of 1954 where the requisite stock or property has been acquired, it is not necessary that all of the stock of the acquiring corporation or a corporation in "control" thereof, which is to be issued in exchange therefor, be issued immediately provided (1) that all of the stock will be issued within five years from the date of the transfer of assets in the case of reorganizations under sections 368(a)(1)(A) and 368(a)(1)(C) of the Code, or within five years from the date of the initial distribution in the case of reorganizations under section 368(a)(1)(B) of the Code; (2) there is a valid business reason for not issuing all of the stock immediately, such as the difficulty in determining the value of one or both of the corporations involved in the reorganization; (3) the maximum number of shares which may be issued in the exchange is stated; (4) at least fifty percent of the maximum number of shares of each class of stock which may be issued is issued in the initial distribution; (5) the agreement evidencing the right to receive stock in the future prohibits assignment (except by operation of law) or, in the alternative, if the agreement does not prohibit assignments, the right must not be evidenced by negotiable certificates of any kind and must not be readily marketable; and (6) such right can give rise to the receipt of only additional stock of the acquiring corporation or a corporation in "control" thereof, as the case may be. Stock issued as compensation royalties or any other consideration other than in exchange for stock or assets will not be considered to have been received in exchange.

¹ Also released as Technical Information Release 888, dated Feb. 27, 1967.