1205002 Informal Interpretation

Date:
Rule:
802.2(c)(1)
Staff:
Michael Verne
Response/Comments:

- I think the revenues that C gets from selling the logs to third parties should be excluded. The only revenues generated by A/timberlands is the payments by C under the cutting contract. The subsequent sale of the logs by C is attributed to C, not the timberlands and A

Question

From:

(redacted)

Sent:

Thursday, May 03, 2012 1:11 PM

To:

Verne, B. Michael

Subject:

802.2(c)(1)

Attachments:

ISO 2008 Timber.pdf

Dear Mike:

"A" is an LLG which owns a parcel of timberlands. A is wholly owned by "B," an LLG controlled by a REIT. B owns all of the voting securities of "C," a corporation treated as a taxable REIT subsidiary.

A's parcel is subject to an IRC 631 (b) cutting contract between A and C. Under the contract, and in compliance with 631(b), C pays A for the right to enter onto A's parcel, harvest and acquire the logs that C has harvested. G then sells the logs from A's parcel to third parties.

We need to determine whether A's parcel is "unproductive" within the meaning 802.2(c)(1), and specifically whether the total revenues generated by the parcel over the preceding 36 months exceed $5 million. In so doing, we understand we may exclude C's payments to A as "intracompany sales." (See ISO (Informal Staff Opinion) 0804002, attached.)

For purposes of 802.2(c)(1), should we include or exclude the revenues obtained by C from its sales of logs (harvested from A's parcel) to third parties?

About Informal Interpretations

Informal interpretations provide guidance from previous staff interpretations on the applicability of the HSR rules to specific fact situations. You should not rely on them as a substitute for reading the Act and the Rules themselves. These materials do not, and are not intended to, constitute legal advice.

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