Common use of Transfer of 100 percent of QSub Clause in Contracts

Transfer of 100 percent of QSub. X, an S corporation, owns 100 percent of the stock of Y, a corporation for which a QSub election is in effect. Z, an unrelated C cor- poration, acquires 100 percent of the stock of (c) Election after QSub termination— (1) In general. Absent the Commissioner’s consent, and except as provided in paragraph (c)(2) of this section, a cor- poration whose QSub election has ter- minated under paragraph (a) of this section (or a successor corporation as defined in§ 1.1362–5(b)) may not make an S election under section 1362 or have a QSub election under section 1361(b)(3)(B)(ii) made with respect to it for five taxable years (as described in section 1361(b)(3)(D)). The Commis- sioner may permit an S election by the corporation or a new QSub election with respect to the corporation before the five-year period expires. The cor- poration requesting consent to make the election has the burden of estab- lishing that, under the relevant facts and circumstances, the Commissioner should consent to a new election.