Determining gross receipts under Sec. 165(g)(3)
The IRS ruled in Letter Ruling 202140002 (released Oct. 8, 2021) that a corporation included the historic gross receipts of its liquidated subsidiary for purposes of the gross-receipts test under Sec. 165(g)(3). The letter ruling has a fact pattern similar to that of Rev. Rul. 2003-125, involving a corporation that becomes insolvent and elects a change in entity classification under Regs. Sec. 301. 7701-3 (an elective change).
While the letter ruling applies only to the requesting taxpayer, it is consistent with prior rulings in which the IRS ruled that a corporation takes into account the gross receipts of a transferor corporation after a transaction under Sec. 381(a). The IRS ruled in Letter Ruling 202140002 (released Oct. 8, 2021) that a corporation included the historic gross receipts of its liquidated subsidiary for purposes of the gross-receipts test under Sec. 165(g)(3). The letter ruling has a fact pattern similar to that of Rev.
Rul. 2003-125, involving a corporation that becomes insolvent and elects a change in entity classification under Regs. Sec. 301. 7701-3 (an elective change).
While the letter ruling applies only to the requesting taxpayer, it is consistent with prior rulings in which the IRS ruled that a corporation takes into account the gross receipts of a transferor corporation after a transaction under Sec. 381(a).