[Code of Federal Regulations]
[Title 26, Volume 4]
[Revised as of April 1, 2004]
From the U.S. Government Printing Office via GPO Access
[CITE: 26CFR1.381(c)(15)-1]

[Page 427]
 
                       TITLE 26--INTERNAL REVENUE
 
    CHAPTER I--INTERNAL REVENUE SERVICE, DEPARTMENT OF THE TREASURY 
                               (CONTINUED)
 
PART 1_INCOME TAXES--Table of Contents
 
Sec. 1.381(c)(15)-1  Indebtedness of certain personal holding companies.

    (a) Qualified indebtedness--(1) Carryover requirement. If, in a 
transaction to which section 381(a) applies, the acquiring corporation 
assumes liability for any indebtedness which was qualified indebtedness 
(as defined in section 545(c) and Sec. 1.545-3) in the hands of the 
distributor or transferor corporation immediately before the assumption 
of such indebtedness, then, under section 381(c)(15), in computing its 
undistributed personal holding company income for any taxable year 
beginning after December 31, 1963, and ending after the date of 
distribution or transfer, the acquiring corporation shall be considered 
the distributor or transferor corporation for purposes of computing the 
deduction under section 545(c) and Sec. 1.545-3. Such deduction shall 
be allowed to the acquiring corporation in accordance with section 
545(c) and Sec. 1.545-3.
    (2) Successive transactions to which section 381(a) applies. If in a 
transaction to which section 381(a) applies, an acquiring corporation 
assumes liability for qualified indebtedness, such acquiring corporation 
shall be deemed to have incurred such qualified indebtedness for the 
purpose of applying section 381(c)(15) to any subsequent transaction in 
which such acquiring corporation is the distributor or transferor 
corporation.
    (b) Pre-1934 indebtedness--(1) Carryover requirement. If, in a 
transaction to which section 381(a) applies, the acquiring corporation 
assumes liability for any indebtedness incurred, or assumed, before 
January 1, 1934, by a distributor or transferor corporation, then under 
section 381(c)(15) the acquiring corporation shall be allowed, in 
computing its undistributed personal holding company income for any 
taxable year ending after the date of distribution or transfer, a 
deduction under section 545(b)(7) for amounts used or irrevocably set 
aside to pay or to retire such indebtedness. Such deduction shall be 
allowed to the acquiring corporation in accordance with section 
545(b)(7) and paragraph (g) of Sec. 1.545-2 as though the indebtedness 
had been incurred, or assumed, by the acquiring corporation before 
January 1, 1934.
    (2) Successive transactions to which section 381(a) applies. If, in 
a transaction to which section 381(a) applies, an acquiring corporation 
assumes liability for indebtedness described in subparagraph (1) of this 
paragraph, such acquiring corporation shall be deemed to have incurred 
the indebtedness before January 1, 1934, for the purpose of applying 
section 381(c)(15) to any subsequent transaction in which such acquiring 
corporation is the distributor or transferor corporation.
    (c) Special rule. For purposes of this section, if, in a transaction 
otherwise described in this section, an acquiring corporation acquires 
real estate--(1) of which the distributor or transferor corporation is 
the legal or equitable owner immediately before the acquisition, and (2) 
which is subject to indebtedness that, with respect to the distributor 
or transferor corporation, is indebtedness described in this section 
immediately before the acquisition, then the acquiring corporation will 
be treated as having assumed such indebtedness, provided it shows to the 
satisfaction of the Commissioner that under all the facts and 
circumstances it bears the burden of discharging such indebtedness.

[T.D. 6949, 33 FR 5524, Apr. 9, 1968; 33 FR 6091, Apr. 20, 1968]