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acquired by the surviving corporation. See, e.g., Rev. Rul. 75-
223, 1975-1 C.B. at 110. The Chief Counsel has stated
unequivocally that the impact of that finding on a distribution
by a corporation of assets received by it in a section 332
liquidation is that the distribution “is to be treated no
differently than a distribution by a corporation of the assets of
a branch or division”. G.C.M. 37,054 (Mar. 21, 1977). Although
that principle has been applied by the Commissioner in specific
contexts (generally, in connection with former section 346 or
section 302(e) partial liquidations), it has been stated as a
principle of law applicable in any case involving a corporate
combination to which section 381 applies. That includes a
section 332 liquidation. Moreover, if a parent corporation’s
distribution to its shareholders of the operating assets of a
former subsidiary, immediately after receiving those assets in a
section 332 liquidation of the subsidiary, qualifies as “a
genuine contraction of the * * * [parent corporation’s] business”
for purposes of section 1.346-1(a)(2), Income Tax Regs., we fail
to see any basis for not applying the same rationale to the
parent’s sale of the liquidated subsidiary’s assets, so that the
sale is treated as a sale of assets used in the parent
corporation’s business for purposes of section 1.954-2(e)(3)(ii)
through (iv), Income Tax Regs.
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