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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

Learning Objectives

  • Explore the congressional intent underlying IRC Section 355.
  • Identify the required rules for executing a tax- free spinoff.
  • Discover the onerous tax consequences if the spinoff does not qualify as tax- free under IRC section 355.
  • Recognize what is required to obtain a favorable private letter ruling from the Internal Revenue Service and what the ruling does not cover.
Last updated/reviewed: March 14, 2020

Prerequisites

Course Complexity: Intermediate
  • Although advanced preparation is not required for this course, a read through of IRC section 355 is helpful.

Education Provider Information

Company:
Illumeo, Inc., 75 East Santa Clara St., Suite 1215, San Jose, CA 95113
Contact:
For more information regarding this course, including complaint and cancellation policies, please contact our offices at (408) 400- 3993 or send an e-mail to .
Course Syllabus
INTRODUCTION AND OVERVIEW
  4:51Introduction to Fundamentals of Tax Free Spinoffs
  4:51Non Tax Corporate Benefits of Tax Free Spinoffs
  9:57Pre-Spinoff Inter-Company Agreements
  8:06 Adverse Tax Consequences If IRC Section not Satisfied
  16:02 Requirements of IRC Section 355 for Tax Free Spinoffs
  5:20 Favorable Tax Results If Spinoff Meets Requirements of IRC Section 355
  10:38 Understanding The Anti-Morris Trust Rule For Tax Free Spinoffs
  6:42The Safe Harbor Exception to The Anti Morris Rules
  9:18Private Letter Rulings for Tax Free Spinoffs
  3:15Summary
CONTINUOUS PLAY
  1:10:58Fundamentals of Tax Free Spinoffs
SUPPORTING MATERIAL
  PDFSlides: Fundamentals of Tax Free Spinoffs
  PDFFundamentals of Tax Free Spinoffs Glossary/Index
REVIEW AND TEST
  quizREVIEW QUESTIONS
 examFINAL EXAM