News & Analysis as of

Spinoffs

Dechert's Global Private Equity Newsletter - Summer 2017 Edition: D&O Insurance Coverage - How Careful Should the Drafting Be?...

by Dechert LLP on

Directors are required to review and approve transformative M&A transactions. The power to approve, however, comes with the potential liability that could be asserted if the transactions do not turn out as projected....more

SEC to Permit Confidential Submission of Draft Registration Statements for All IPOs and Spin-Offs, Including by Non-EGCs

by Shearman & Sterling LLP on

On June 29, 2017, the SEC’s Division of Corporation Finance announced that, beginning on July 10, 2017, it will permit confidential submissions of draft registration statements for all initial public offerings (IPOs),...more

In Case You Missed It: Launch Links - June, 2017

by WilmerHale on

Some interesting links we found across the web this week: HBO’s ‘Silicon Valley’ Tackled an Issue That’s all too Familiar to Startups: The Threat of Frivolous Patent Litigation - The threat of frivolous patent...more

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

A Step in the Right Direction: IRS Rules on North-South Spinoffs

The Internal Revenue Service (IRS) recently released guidance on certain “north-south” spinoff transactions. Generally, a “north-south” transaction consists of a transfer of property from a shareholder to a corporation close...more

Guidance For North-South Spinoffs

by Farrell Fritz, P.C. on

The IRS continues to issue guidance in the much debated area of corporate spinoffs. A recently published ruling examined the federal income tax treatment of the two steps that comprise a so-called “north-south” transaction.”...more

Internal Revenue Service Announces It Will Recommence Issuing Private Letter Rulings on Certain Spin-Off Debt Exchanges

by Shearman & Sterling LLP on

The Internal Revenue Service has announced that it will recommence issuing private letter rulings concerning whether a distributing corporation’s transfer of stock or securities of a controlled corporation (or “Spinco”) in...more

IRS Issues Guidance on "North-South" Transactions

On May 3, 2017, the IRS released Revenue Ruling 2017-9, which addresses two so-called "north-south" transactions in connection with spin-offs that are intended to be nontaxable under Section 355 of the Internal Revenue Code....more

Delaware Courts Expand Corwin Line of Cases

by Dorsey & Whitney LLP on

On March 7, 2017, Vice Chancellor Laster of the Delaware Court of Chancery dismissed the action In re Columbia Pipeline Group, Inc., C.A. No.12152-VCL. Stockholders of Columbia Pipeline Group, Inc. (“CPG”) claimed that CPG’s...more

Recent Cases Restrict Issuers' Ability to Avoid Paying Premiums

by White & Case LLP on

Indentures governing high yield and investment grade notes typically provide for a make-whole or other premium to be paid if the issuer redeems the underlying notes prior to maturity. The premiums are intended to compensate...more

When a 'Business Expansion' Can Satisfy the Active Trade or Business Requirement in Section 355 Distributions - Volume 2016, Issue...

by Pepper Hamilton LLP on

The active trade or business rules are detailed and highly fact specific, and the IRS continues to refine its view on the qualification requirements. In order to separate two businesses housed in one corporation or in a...more

NYSE Clarifies Answers to Certain FAQs on Equity Compensation Plans

by Dorsey & Whitney LLP on

Rule 303A.08 of the NYSE Listed Company Manual requires that shareholders must be given the opportunity to vote on all equity-compensation plans and material revisions to such plans, with limited exceptions specified in the...more

IRS Updates Ruling Policy on Corporate Business Purpose and Device Requirements under Section 355

by Proskauer - Tax Talks on

The U.S. Internal Revenue Service (“IRS”) released Revenue Procedure 2016-45 (the “Revenue Procedure”) on August 26, 2016, permitting taxpayers once again to seek private letter rulings on issues of “corporate business...more

New Spin-Off Regulations Proposed

by Alston & Bird on

In July the Treasury proposed regulations reinterpreting Section 355 in cases where one of the corporations involved in the spinoff has more investment assets than the other or very little five-year active trade or business...more

Proposed Regulations under Section 355 Clarify Device and Active Trade or Business Requirements for Tax-Free Spin-offs

by Proskauer Rose LLP on

On July 15, 2016, the U.S. Internal Revenue Service (IRS) and the Department of the Treasury (Treasury) published proposed regulations that would modify the device and active trade or business requirements for tax-free...more

Spin-Off Revenue Procedure Removes a No-Rule Area and Provides Safe Harbors for Unwinding High Vote/Low Vote Stock Structures

by Shearman & Sterling LLP on

On July 15th, the IRS released Rev. Proc. 2016-40 (the “Rev. Proc.”) removing a recent “no-rule” area with respect to transactions undertaken in anticipation of a spin-off involving high vote/low vote stock classes for the...more

Section 355 Guidance: More Clarity and New Tests on Device, Active Trade or Business and Distribution of Control

by Pepper Hamilton LLP on

The recent guidance under section 355 is a significant attempt by the IRS to clarify in a formal way what it historically has been able to do on a case-by-case basis through the private letter ruling process....more

Treasury and IRS Issue New Spin-Off Proposed Treasury Regulations On Device and Active Trade or Business Requirements

by Shearman & Sterling LLP on

On July 14, 2016, the Treasury Department and the IRS issued proposed regulations under Section 355 on spin-off transactions (the “Proposed Regulations”) that provide guidance with respect to the spin-off device prohibition...more

Proposed Regulations Would Block Some Spinoffs

Proposed regulations issued on July 14, 2016 generally would prevent tax-free spinoffs involving companies with less than 5% active business assets and spinoffs where one company holds a substantial amount of nonbusiness...more

Five Things about the IRS’s Proposed Regulations on the Spinoff Device and Active Business

On July 14, 2016, the Internal Revenue Service (IRS) proposed long-anticipated regulations tightening the “device” and “active trade or business” tests that are necessary for a corporation to distribute a subsidiary in a...more

Delaware Law Updates - Delaware Supreme Court Defers to the Court of Chancery’s Fact-Finding and Witness Credibility...

by McCarter & English, LLP on

In a recent decision out of the Delaware Supreme Court—CDX Holdings, Inc. v. Fox, C.A. No. 526, 2015 (Del. June 6, 2016)—Justice Holland, writing for the majority, affirmed a Court of Chancery post-trial decision that found...more

Treasury Expands Scope of REIT Spin-Off Rules in New Regulations

by Morrison & Foerster LLP on

On June 7, the Treasury Department released temporary regulations (the “Temporary Regulations”) that expand the types of spinoff transactions subject to the rules under Section 337(d)2 requiring gain recognition where either...more

IRS Issues Temporary and Proposed Regulations Focused on REIT/RIC Conversion Transactions

by Morgan Lewis on

The regulations affect both real estate investment trusts (REITs) and regulated investment companies (RICs) that receive appreciated property from a C corporation in a so-called “conversion transaction.”...more

Federal Tax Advisory: General Utilities Repeal and Spins

by Alston & Bird on

Notice 2015-59, 2015-40 IRB 459, issued last September, suggests that the IRS has concerns about several aspects of Section 355 tax-deferred spinoffs. One of these is the relevance of the 1986 repeal of the General Utilities...more

On Remand, District Court Rules for the Fiduciaries in Tatum v. R.J. Reynolds

The R.J. Reynolds defendants have again prevailed against allegations that they breached their fiduciary duties by divesting the RJR 401(k) plan of funds invested in Nabisco stock. Following remand by the Fourth Circuit, the...more

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