The IRS announced that it is reviewing its approach to the active trade or business requirement that must be met for a five-year period for a business to qualify for a tax-free spinoff under Sec. 355 and, as a result, is suspending two revenue rulings, Rev. Ruls. 57-464 and 57-492, in which it previously ruled on the topic.
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Formation, Liquidation & Reorganization
Corporate transactions’ effect on retirement plans
This article discusses several key factors that CPAs and benefit plan advisers should consider to help successfully integrate plans during a merger or acquisition.
Upstream, downstream: Upstream C reorganizations with a drop
The transaction accomplishes a distribution of assets to the parent, which may be effected in a tax-free manner only in limited circumstances.
IRS revisits General Utilities repeal
Provisions relating to the repeal of the General Utilities doctrine may again face scrutiny.
When to use a tax-free reorganization
In some circumstances, a taxable stock sale may make more sense.
Leased farmland and the active business requirement for a tax-free reorganization
Meeting the active trade or business requirement is critical to ensuring a corporation leasing farmland qualifies for a tax-free divisive reorganization.
Substantive consolidation: A tale of two cases
Because there is no clear statutory guidance for how a bankruptcy judge determines if a trustee’s request to apply substantive consolidation should be granted, each case is different.
IRS announces it will rule on tax-free stock distributions
The IRS is introducing an 18-month pilot program under which it will once again issue letter rulings concerning the general income tax effects of stock distributions under Sec. 355.
Letter ruling provides guidance on distributions in a reorganization
The IRS ruled on how the distribution of stock is treated in a tax-free reorganization and whether there is any potential recognition of gain.
Net value requirement for tax-free reorganization treatment withdrawn
The IRS withdrew rules it proposed in 2005 that would have required certain corporate formations and reorganizations to meet net value requirements before they would qualify for nonrecognition treatment.
IRS to rule on tax-free stock distributions
The IRS is introducing an 18-month pilot program under which it will once again issue letter rulings concerning the general income tax effects of stock distributions under Sec. 355.
IRS will rule on leveraged spinoffs again
The IRS says it will again issue rulings on corporate leveraged spinoff transactions.
IRS withdraws proposed net value requirement rule
The IRS withdrew rules it proposed in 2005 that would have required certain corporate formations and reorganizations to meet net value requirements before they would qualify for nonrecognition treatment.
Potential merger incentives resulting from proposed tax reform
The House Blueprint, if enacted, may provide incentives for certain taxpayers to merge in the future.
Leveraged spinoffs removed from IRS no-ruling list
The IRS says it will again issue rulings on corporate leveraged spinoff transactions.
Proposed ‘hot dog stand’ regulations for spinoffs
The proposed regulations are intended to further limit a corporation’s ability to separate business assets from nonbusiness assets in a tax-free manner.
Uncertainty Surrounding Back-to-Back F Reorganizations
The tension between the two principles of the new regulations can cause taxpayers uncertainty.
When Entity Simplification Is Not So Simple
Carrying over E&P from one entity to another and administrative burdens can lead to
headaches down the road.
IRS Eliminates No-Rule Policy for Business Purpose and Device Rule Issues
The application of the business purpose and device rules often involves both legal and factual questions.
How to Document a Tax-Free D Reorganization With a Split-Off
A taxpayer that treats a split-off transaction
as a tax-free D reorganization must be able to
prove to the IRS that the transaction meets all requirements.
PRACTICE MANAGEMENT
2026 tax software survey
CPAs rate their return preparation software’s performance during this year’s tax season.
