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
Artificial intelligence is not just about chatbots. Increasingly, it is used by government for enforcement, and boards need to prepare for that, just as they need to get ready for upcoming climate disclosure requirements....more
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
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
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
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
The Cadwalader Tax team has prepared a case study summarizing General Electric’s recently announced plans to split into three publicly traded companies through sequenced tax-free spin-off transactions. ...more
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
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
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
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
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
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
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