New Regulations Ease Post-Spin Off Tax Anxieties
- Topics:
- Taxes
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- Corporation,
- Finance,
- Financial Planning,
- Free Trade,
- Government,
- Law Library Resource Xchange,
- Regulations,
- Taxes
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Overview: After Section 355(e) was added to the Internal Revenue Code in 1997, corporations involved in spin-off transactions embarked upon post-spin business combination discussions at their peril, because such a combination could trigger a corporate tax in connection with the spin-off. This so-called "anti-Morris Trust" provision was designed to treat a spin-off that ends up resembling a sale or merger as if the distributing (parent) corporation of the spun-off subsidiary had actually sold the subsidiary. Two sets of regulations regarding this controversial provision have previously been published, and now we have a third set, published on April 23. The latest regulations are a big improvement for corporations. Under these new temporary Treasury regulations (the "New Regulations"), corporations that have been or will be involved in spin-offs (and potential suitors approaching those corporations) have clearer¿and generally more favorable¿guidelines, making it safer to engage in certain post-spin business combinations without triggering a potentially catastrophic tax liability.
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Format: HTML | Date: May 2003 | Pages: 1
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