Rev. Proc. 77-41

Rev. Rul. 77-37, 1977-2 C.B. 568, contains operating rules for the issuance of advance rulings as to matters within the jurisdiction of the Reorganization Branch of the Internal Revenue Service. Rev. Proc. 77-37 is amplified to include the following:

A ruling will usually be issued under section 302(a) of the Code that cash to be distributed to shareholders in lieu of fractional share interests arising in corporate reorganizations, stock splits, stock dividends, conversion of convertible stocks, and other similar transactions will be treated as having been received in part or full payment in exchange for the stock redeemed if the cash distribution is undertaken solely for the purpose of saving the corporation the expense and inconvenience of issuing and transferring fractional shares, and is not separately bargained-for consideration. The purpose of the transaction giving rise to the fractional share interests, the maximum amount of cash that may be received by any one shareholder, and the percentage of the total consideration that will be cash are among the factors that will be considered in determining whether a ruling is to be issued.

Rev. Proc. 73-35, 1973-2 C.B. 490, calls for the submission of certain information with requests for rulings under section 302 of the Code. This information need not be supplied with requests for rulings with respect to redemptions of fractional share interests. However, Rev. Proc. 72-3, 1972-1 C.B. 698, and section 601.201 of the Statement of Procedural Rules (26 CFR 601.201 (1977)) which contain the procedures to be followed for the issuance of ruling letters, should be complied with.

Rev. Proc. 77-37 is amplified and Rev. Proc. 73-35 is modified.