[Code of Federal Regulations]
[Title 26, Volume 18]
[Revised as of April 1, 2004]
From the U.S. Government Printing Office via GPO Access
[CITE: 26CFR301.7477-1]

[Page 542-543]
 
                       TITLE 26--INTERNAL REVENUE
 
    CHAPTER I--INTERNAL REVENUE SERVICE, DEPARTMENT OF THE TREASURY 
                               (CONTINUED)
 
PART 301_PROCEDURE AND ADMINISTRATION--Table of Contents
 
                          Judicial Proceedings
 
Sec. 301.7477-1  Declaratory judgments relating to transfers of property 
from the United States.

    (a) Petition--(1) General rule. A transferor or transferee of stock, 
securities of property transferred in an exchange described in section 
367(a)(1) may petition the Tax Court for a declaratory judgment with 
respect to the exchange if--
    (i) The pleading is timely filed; and
    (ii) The exchange has begun before the pleading is filed.
    (2) Pleading timely filed. The pleading is timely filed if it is 
filed before the 92d day after the day on which notice of the 
determination of the Commissioner is sent to the petitioner by certified 
or registered mail. In the absence of such notice, neither section 7477 
nor this section imposes any time limit on the filing of the pleading.
    (3) Beginning of exchange. An exchange generally shall be considered 
to begin upon the beginning of the first transfer of property pursuant 
to the plan under which the exchange is to be made. For rules 
determining the beginning of a transfer, see Sec. 1.367(a)-1(c)(4).

A transfer shall not be considered to begin with a decision of a board 
of directors or similar action. A transfer shall be deemed to have begun 
even though it is made subject to a condition that, if there is a 
failure to obtain a determination that the exchange is not in pursuance 
of a plan having as one of its principal purposes the avoidance of 
Federal income taxes, the transaction will not be consummated and to the 
extent possible the assets transferred will be returned.
    (b) Judgment--(1) General rule. The Tax Court may issue a 
declaratory judgment or decree within the scope described in section 
7477(a)(2) if--
    (i) There is a case of actual controversy, and
    (ii) The petitioner has exhausted the administrative remedies 
available to it within the Internal Revenue Service,

with respect to a determination or a failure to make a determination.
    (2) Exhaustion of administrative remedies. The petitioner shall be 
deemed to have exhausted the administrative remedies available to it 
within the Internal Revenue Service if--
    (i) The petitioner has completed all applicable procedures published 
in regulations, the statement of procedural rules (26 CFR part 601) or 
revenue procedures relating to the filing of a request for a ruling 
under section 367(a)(1) and, if such a ruling has been issued, to the 
filing of a protest to such a ruling;
    (ii) The petitioner has submitted prompt and complete responses to 
any requests by the Internal Revenue Service for further information; 
and
    (iii) The Internal Revenue Service has had a reasonable time to act 
upon the request for the ruling, any protest thereto and any additional 
information submitted in response to any request made therefor by the 
Internal Revenue Service. If there has been a failure to make a 
determination, the Internal Revenue Service shall be deemed not to have 
had a reasonable time to act before the expiration of 270 days after the 
day on which petitioner properly filed the request for a ruling. In no 
event shall the Internal Revenue Service be deemed to have had a 
reasonable time to act if a failure to act has occurred because the 
petitioner did not proceed with due diligence or because the petitioner 
has not provided all available information or materials reasonably 
requested by the Internal Revenue Service.
    (3) Effect of judgment. The declaratory judgment or decree of the 
Tax Court, when final under section 7481, shall be binding on the 
parties to the case for purposes of section 367(a)(1). However, if the 
facts of the exchange differ from those presented to the Court, the 
judgment shall be binding only to the extent appropriate under the legal 
doctrines of estoppel and stare decisis.
    (c) Definitions--(1) Exchange described to section 367(a)(1). For 
purposes of this

[[Page 543]]

section, an ``exchange described in section 367(a)(1)'' is an exchange 
in connection with which the petitioner has filed a ruling request 
pursuant to section 367(a)(1) and the regulations thereunder without 
regard to whether or not section 332, 351, 354, 355, 356 or 361 applies 
to the exchange.
    (2) Determination. For purposes of this section, a ``determination'' 
is the Commissioner's determination for purposes of section 367(a)(1), 
made in response to the petitioner's protest to a ruling issued under 
section 367(a)(1)--
    (i) That an exchange described in section 367(a)(1) is in pursuance 
of a plan having as one of its principal purposes the avoidance of 
Federal income taxes, or
    (ii) Of the terms and conditions pursuant to which such an exchange 
will be determined not to be in pursuance of such a plan.
    (d) Effective date. The provisions of this section shall apply with 
respect to pleadings filed after October 4, 1976, but only with respect 
to exchanges beginning after October 9, 1975.

(Approved by the Office of Management and Budget under control number 
1545-0719)

(Sec. 367(a)(1), 90 Stat. 1634, 26 U.S.C. 367(a)(1) and 7805, 68A Stat. 
917, 26 U.S.C. 7805, Internal Revenue Code of 1954)

[T.D. 7596, 44 FR 10707, Feb. 23, 1979, as amended by T.D. 7954, 49 FR 
19466, May 8, 1984]

                   court review of tax court decisions