Tax-free spin-offs require a valid business purpose
Article Abstract:
Section 1001(c) of the Internal Revenue Code requires the recognition of the entire gain or loss on a sale or exchange of property, but there are important exceptions to such treatment available to corporations reorganizing or separating. Section 355 allows corporate shareholders to divide up the corporation without paying a tax. However, under Reg. 1.355.2(b), in order for a spin-off to qualify for tax-free status, the transaction must have been completed for a valid business purpose. Business purposes considered valid by the IRS include the creation of spin-offs due to: distributions made to settle shareholder disputes; distributions to increase a corporation's financing capacity; and distributions to affect a transfer of stock to key employees.
Publication Name: Taxation for Accountants
Subject: Business
ISSN: 0040-0165
Year: 1990
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Distribution options for IRAs offer tax-saving opportunities
Article Abstract:
The authors discuss tax planning for IRAs with a focus on distribution methods. Issues addressed include timing, amount of withdrawals, influence of death, and estate and excise taxes.
Publication Name: Taxation for Accountants
Subject: Business
ISSN: 0040-0165
Year: 1997
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- Abstracts: Estate planning ideas for qualified small business stock. Supreme Court closes the door (almost) on ordinary losses for stock transactions
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