Flash MX 2004.
layer.parentLayer
Property; a Layer object that represents the layer’s containing folder, guiding, or masking layer. The parent layer must be a folder, guide, or mask layer that precedes the layer, or the parentLayer of the preceding or following layer. Setting the layer’s parentLayer does not move the layer’s position in the list; trying to set a layer’s parentLayer to a layer that would require moving it has no effect. Uses null for a top-level layer.
The following example uses two layers at the same level on the same timeline. The first layer (layers[0]) is converted into a folder and then set as the parent folder of the second layer (layers[1]). This action moves the second layer inside the first layer.
var parLayer = fl.getDocumentDOM().getTimeline().layers[0];
parLayer.layerType = "folder";
fl.getDocumentDOM().getTimeline().layers[1].parentLayer = parLayer;