News & Analysis as of

Section 355

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

Jones Day

Internal Revenue Service Alters Its View on Section 355 Spin-Offs

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The Internal Revenue Service ("IRS") recently issued important guidance identifying new positions the IRS is considering on critical aspects of tax-free spin-offs, and significantly expanding the information that taxpayers...more

Skadden, Arps, Slate, Meagher & Flom LLP

IRS Issues Initial Guidance for New Excise Tax on Stock Buybacks and Corporate Alternative Minimum Tax

On December 27, 2022, the IRS issued two notices providing key initial guidance for the new excise tax on corporate stock buybacks and the new corporate alternative minimum tax (CAMT). Both the excise tax and the CAMT were...more

Miller Nash LLP

Today in Tax: Spin-off Structures in Mergers & Acquisitions

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Brief commentary on the past week’s cases, rulings, notices, and related federal tax guidance. Corporations Permitted to Rely on Public Shareholder Data to Confirm Qualification for Tax-Free Spin-off and Subsequent Merger...more

Jackson Lewis P.C.

U.S. Supreme Court: Courts Can Review Railroad Retirement Board’s Refusal To Reopen Claims

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In a 5-4 decision, the U.S. Supreme Court has ruled that federal courts can review decisions by the U.S. Railroad Retirement Board denying claimants’ requests to reopen prior benefits denials. Salinas v. U.S. R.R. Ret. Bd.,...more

Faegre Drinker Biddle & Reath LLP

Supreme Court Decides Salinas v. Railroad Retirement Board

On February 3, 2021, the U.S. Supreme Court decided Salinas v. United States Railroad Retirement Board, No. 19–199, holding that a refusal by the U.S. Railroad Retirement Board to reopen a prior benefits determination is...more

Wilson Sonsini Goodrich & Rosati

IRS Ruling May Further Signal a Relaxation of “Collection of Income” Prong of Tax-Free Spin-off Active Trade or Business Test

On February 28, 2020, the Internal Revenue Service (IRS) released private letter ruling 202009002 (the PLR), which concluded that an absence of income does not, under the facts of the PLR, prevent a line of business from...more

Farrell Fritz, P.C.

You Can Spin It Off Or Split It Up, But Keep It Active

Farrell Fritz, P.C. on

A couple of months back, a local business reporter asked whether I could identify one kind of corporate transaction that was occupying more of my time than any other. When I asked whether they were referring to any specific...more

Farrell Fritz, P.C.

Tax-Free Spin-Off? That May Depend . . . On Post-Spin-Off Events

Farrell Fritz, P.C. on

The Break-Up- After a tense period of disagreement and stalemate, the threaten of litigation, the ensuing economic and emotional stress, Client and their former fellow-shareholder (“Departing”) – and onetime friend, before...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

Alston & Bird

Split-offs and Device

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Our Federal Tax Group considers ways to pass the inscrutable device prohibition in the Section 355 rules. - An “out” from device - How about a Morris Trust transaction? - Where does the cash come in?...more

Smith Anderson

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

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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

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

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

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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

Eversheds Sutherland (US) LLP

IRS announces campaign to review corporate transaction costs

New Campaigns Announced - On March 13, 2018, the Large Business and International (LB&I) Division of the Internal Revenue Service (IRS) announced five new compliance campaigns. The five campaigns supplement the 13 initial...more

Troutman Pepper

New Private Letter Ruling Pilot Program - Focus on Spin-Off Transactions - Tax Update Volume 2017, Issue 6

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In a new 18-month pilot program, the IRS is temporarily opening up a previous no-rule policy with respect to certain issues arising in a distribution by a corporation to its shareholders under Section 355....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

Proskauer - Tax Talks

IRS Issues Final Regulations on REIT and RIC Conversion Transactions

Proskauer - Tax Talks on

The U.S. Treasury Department and the Internal Revenue Service published on January 18, 2017 final regulations (the “Final Regulations”) reducing from ten years to five years the recognition period for the corporate-level tax...more

Alston & Bird

Predecessor and Successor Regulations

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In December, the Treasury published temporary and proposed regulations clarifying the application of Section 355(e) when the distributing (D) corporation or the controlled (C) corporation has a predecessor (P) or...more

Troutman Pepper

Tax Developments in 2016: Federal Tax (Part I) - Sections 355, 382, and 385; and new rules on partnership audits dominate...

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Section 385 Proposed Regulations — Impact on Related-Party Financing - Section 385 has been in the Internal Revenue Code since 1969. It was enacted to provide guidance for whether to classify an interest in a corporation...more

Troutman Pepper

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

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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

Alston & Bird

Private Letter Ruling 201633009

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This recent ruling by the IRS is significant for what it does not say. It does not say much of anything. It is a “significant issue” ruling, which is a type of limited ruling issued by the Corporate Division of Chief...more

Proskauer - Tax Talks

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

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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

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