In this IRS ruling, a parent corporation owned all of the stock of subsidiary 1. Subsidiary 1, in turn, owned all of the stock of subsidiary 2. Subsidiary 2 owns all of the stock of subsidiary 3. The parent corporation owned all of the interests in an LLC which had elected corporate tax treatment. The parent corporation proposed to transfer all of its interests in the LLC to subsidiary 1. Subsidiary 1 would then transfer the interests to subsidiary 2 which would then transfer to subsidiary 3. At each step along the way, stock would be issued to the transferor by the transferee. At the end of the transactions, the LLC would elect to be treated as a disregarded entity. The IRS determined that two I.R.C. Section 351 transfers were involved and a type "D" reorganization upon the transfer from subsidiary 2 to 3, based on Rev. Rul. 67-274. Rev. Rul. 2015-10.
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