LTR 201542004 at first seems to involve a standard spinoff for the purpose of pursuing a reverse Morris Trust combination of Controlled with a Merger Partner, with the “significant issue” for ruling being a proposed swap of Controlled debt for Distributing debt, which has been bought up by an investment banker. But the facts are quite odd and more seems to be going on.

Reverse Morris Trust -

After the spin, a Merger Sub of Merger Partner will merge into Controlled, and evidently Controlled shareholders will get the majority of the stock of Merger Partner. However, the transfer agent will hold the Controlled stock and Distributing’s shareholders will never receive it; they will just get Merger Partner stock. The IRS ruled that the Controlled stock would be deemed distributed and then exchanged.