News & Analysis as of

Internal Revenue Service Spinoffs

The United States Internal Revenue Service is a bureau of the United States Department of the Treasury. The IRS is charged with collecting revenue and enforcing the Internal Revenue Code.  
McDermott Will & Emery

Protecting Employees’ Tax Position After a Spin-off

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Spin-offs have become increasingly popular with innovative companies as a method of unlocking shareholder value, but the transaction is not always tax-free, particularly for international employees holding equity awards or...more

Cooley LLP

Recent Release of Updated Procedures for Section 355 Private Letter Rulings

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The US Department of the Treasury (Treasury Department) and the IRS recently released Revenue Procedure 2024-24 (Revenue Procedure) and Notice 2024-38 (Notice) establishing revised standards and procedures for taxpayers...more

Cadwalader, Wickersham & Taft LLP

IRS Distributes New Ruling Requirements for Corporate Spin-Off Transactions

Earlier this month, the IRS released Revenue Procedure 2024-24, which sets forth new requirements for requests for private letter rulings ("PLRs") on corporate spin-off and split-off transactions.  (Both spin-offs...more

Cadwalader, Wickersham & Taft LLP

IRS Hints at Revolution in Tax-Free Spin-Off Rules, Ruling Practice

Over the last three months, public statements by U.S. Treasury and Internal Revenue Service officials have suggested that they are in the process of significantly revising the rules governing tax-free spin-offs, split-offs...more

Wilson Sonsini Goodrich & Rosati

IRS Permits Pre-Revenue Company to Undertake a Tax-Free Spin-Off

On November 18, 2022, the Internal Revenue Service (IRS) published private letter ruling 202246008 (the PLR), which concluded that a transaction qualifies as a tax-free spin-off under Section 3552 despite the fact that the...more

Miller Nash LLP

Today in Tax: IRS Introduces Fast-Track Process for Obtaining Letter Rulings

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Corporate reorganizations and spin-off transactions are transactions where there is often a great deal of incentive to qualify for tax-free treatment. In many cases, the amount of tax at issue justifies obtaining a private...more

Skadden, Arps, Slate, Meagher & Flom LLP

Build Back Better Act Would Change Monetization Playbook for Tax-Free Spin-Offs

Takeaways - Tax law changes in the Build Back Better Act (BBBA) would limit the amount of value a company could extract in a spin-off by using a debt-for-debt exchange. Companies may be able to achieve most of the...more

Jones Day

New Fast-Track IRS Guidance for Spin-Offs and Other Corporate Transactions

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On January 14, 2022, the Internal Revenue Service ("IRS") released Revenue Procedure 2022-10, which establishes a "fast-track processing" pilot program for certain private letter ruling requests that are solely or primarily...more

Miller Nash LLP

Today in Tax: Foreign Tax Credits Against Digital Service Taxes, Partial Spin-Off Structures, and Filing Relief for Equity Grants,...

Miller Nash LLP on

Brief commentary on recent cases, rulings, notices, and related federal tax guidance as of December 14, 2021. U.S. Agreements Expand Potential Tax Credits for Digital Service Taxes - The global tax landscape is...more

Miller Nash LLP

Today in Tax: Spin-offs, Tax Elections, and Subpart F

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Regulations frequently change as Congress adopts new policies and the IRS issues new or revised regulations implementing those policy changes. Tax elections based on existing law cannot be revoked if later regulatory changes...more

Cadwalader, Wickersham & Taft LLP

A Peek Behind the Curtain: IRS Musings on Spinoff Ruling Procedures

Speaking at several tax conferences this month, several senior IRS officials, including the Associate Chief Counsel, Corporate, discussed the nuances of the device requirement for spinoffs and signaled a willingness to relax...more

A&O Shearman

IRS Permits First Spin-off of R&D Intensive Business With No Pre Spin-off Income

A&O Shearman on

On February 28, 2020, the Internal Revenue Service (the “IRS”) released PLR 202009002, the first private letter ruling that will potentially permit a tax-free spin-off of a research and development (“R&D”) intensive business...more

Alston & Bird

Spin-Off Expenses

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Our Federal Tax Group considers whether corporations that have engaged in spinoffs should be aggressive in deducting expenses. ...more

Farrell Fritz, P.C.

Spin-Offs, Mergers, And . . . Gifts? Oh My

Farrell Fritz, P.C. on

Mostly Divisions- Over the last several months, many of the projects on which I have been working have involved the division of a corporation or of a partnership. Yes, there have been purchases and sales of businesses...more

Wilson Sonsini Goodrich & Rosati

IRS Ruling May Signal Relaxation of "Collection of Income" Prong of Section 355 Active Trade or Business Test

On May 17, 2019, the Internal Revenue Service (IRS) published private letter ruling 201920008 (the PLR), which concluded that a transaction qualifies as a tax-free spin-off under Section 355 despite the fact that the...more

Bracewell LLP

Spin Me Right Round: Recent Developments Impacting Tax-Free Spin-Offs

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In our recent article on spin-offs (click here), we discussed an announcement made by the Internal Revenue Service (IRS) signaling a change in the application of the active trade or business (ATB) requirement under Section...more

Smith Anderson

Spin-off Revival: IRS Rethinks the Active Trade or Business Requirement

Smith Anderson on

The “five-year active trade or business” or “ATB” requirement of section 355 is notorious for defeating many otherwise promising tax-free spin-off transactions. Consider the following common scenarios... Originally...more

Latham & Watkins LLP

IRS Publishes Ruling Requirements for Certain Tax-Free Spin-Off Monetization Transactions

Latham & Watkins LLP on

The new guidance is significant given the popularity of debt exchanges as a monetization technique in conjunction with spin-offs. On October 3, 2018, the Internal Revenue Service (IRS) published Revenue Procedure 2018-53,...more

A&O Shearman

IRS Announces Study of Active Trade or Business Requirement for Spin-off Transactions

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On September 25, 2018, the IRS announced that it is undertaking a study regarding the application of the five-year active trade or business requirement of Section 355(b) (the “ATB Requirement”) to entrepreneurial ventures...more

Latham & Watkins LLP

IRS Studying Active Trade or Business Requirement for Tax-Free Spin-Offs

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The IRS is considering future guidance that could present opportunities for R&D phase businesses. In a statement issued on September 25, 2018, the Internal Revenue Service (IRS) announced that it is studying the active...more

Wilson Sonsini Goodrich & Rosati

IRS May Relax Collection of Income Prong of Section 355 Active Trade or Business Test for R&D Companies

On September 25, 2018, the Internal Revenue Service (the IRS) released a statement announcing a study of the "active trade or business" test for tax-free spin-offs under Section 355 (the ATB Test), as applied to...more

Dickinson Wright

Using Tax-Free Section 355 Split-Off In Corporate Division

Dickinson Wright on

Sometimes, it becomes necessary for a corporation to be divided, in which a shareholder or a group of shareholders would separate from the corporation and take with them a business division, unit or location. Parties...more

A&O Shearman

IRS Expands Scope of Spin-Off Private Letter Rulings in 18-Month Pilot Program

A&O Shearman on

On September 21, 2017, the IRS announced in Revenue Procedure 2017-52 (the “Pilot Program Rev. Proc.”) that it is expanding the scope of spin-off private letter ruling requests that it will consider. The pilot program is...more

Proskauer - Tax Talks

IRS Resumes Issuing Transactional Spin-Off Rulings

Proskauer - Tax Talks on

On September 21, 2017, the Internal Revenue Service (the “IRS”) issued Revenue Procedure 2017-52 (the “Rev. Proc.”), introducing an 18-month “pilot program” in respect of corporate “spin-off,” “split-up” and “split-off”...more

Kramer Levin Naftalis & Frankel LLP

Funds Talk: June 2017 - The IRS Resumes Issuing Private Letter Rulings on ‘Leveraged’ and ‘North-South’ Spinoffs

The IRS announced in May that it will resume issuing private letter rulings (PLRs) on two types of spinoff transactions — leveraged spinoffs and north-south spinoffs — that had been on its “no-rule” list since 2013. In a...more

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