Fundamentals of Tax Free Spinoffs

Tax free spinoffs are the main vehicle to transfer value to the shareholder without the shareholder being taxed and without the corporation being taxed. Generally, under the IRC, all increases in wealth through distributions or sales or exchanges are taxable unless the taxpayer finds an IRC provision which exempts the income or defers the income recognition. IRC section 355 is such a tax deferred provision.

Course Key Contents: Corporate Business Purpose, Continuity of Interest, Active Trade or Business, The Device Limitation, Control, Debt Assumption, Split Stock Options, Prorata v. Nonprorata Spinoff, Anti Morris Trust Rules, Safe Harbor Exception to Anti Morris Trust Rules, IRS Revenue Procedure to Obtain Private Letter Ruling