The potential for triggering painful income tax liabilities from the “built-in gains” tax1 upon shifting from C corporation status to S corporation status is well known.2 The built-in gains tax is imposed in an effort to thwart attempts by C corporations to elect S corporation status to minimize the effects of the modification of the corporate liquidation rules in the 1986 Act. However, a recent private letter ruling has focused attention on the imposition of the built-in gains tax in the event of a merger without regard to the date of the corporation’s election to be an S corporation.3