Tag Archives: Section 355

Federal Tax ADVISORY: Predecessor and Successor Regulations

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There are still many questions about the meaning of the Treasury’s new regulations applying Section 355(e) to predecessors and successors. Our Federal Tax Group examines the answers we do have and what they mean for practitioners.

Read the full advisory here. 

Federal Tax Advisory: New Spin-Off Regulations Proposed

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It could have been worse. Our Federal Tax Group examines the good news and bad news of the Treasury’s latest reinterpretation of Section 355.

Click here to read the full advisory.

Federal Tax Advisory: General Utilities Repeal and Spins

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Our Federal Tax Group notes IRS concerns about Section 355 tax-deferred spinoffs, including the relevance of the 1986 repeal of the General Utilities doctrine.

Click here to view the entire advisory on the Alston & Bird website.

Federal Tax ADVISORY: Hook Stock Split Down

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LTR 201404002 Rev. Proc. 2014-3 provides that the IRS won’t issue rulings on “the treatment or effects of hook equity, including as a result of its issuance, ownership, or redemption.” It defines hook equity as “an ownership interest in a business entity (such as stock in a corporation) that is held by another business entity in which at least 50 percent of the interests (by vote or value) in such latter entity are held directly or indirectly by the former entity.” But a recent ruling involved hook stock and predated the no-rule. LTR 201404002 involved a surprising but somewhat common [...]Read more

Corporate Letter Rulings Cut Back

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Rev. Proc. 2013-32, issued on June 25, 2013, substantially restricts the scope of letter rulings that taxpayers can obtain from chief counsel (corporate) on the core subchapter C nonrecognition transactions covered by sections 332, 351, 355 and 368, as well as related issues under sections 354, 356, 358 and 361. Comfort Rulings. There has been in place a ban on various “comfort rulings” and limitations on certain factual issues in section 355 rulings. There has been a way around some of these limitations. If the taxpayer could ask for a ruling on a “significant issue,” then the IRS might [...]Read more

Why We Get Spin-Off Rulings

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Facts: Former Parent owned Parent, which owned Controlled, which owned Sub 1, which owned Distributing. At the end of the day, but before the investment in Controlled, the corporations were to be rearranged to look like this: Former Parent is separated; Parent now heads the group and owns Controlled, which owns Sub 1; and Parent also owns Distributing. In other words, somehow Controlled and Distributing must become brother-sister corporations under Parent, so that when Controlled disaffiliates, the new investor does not get an interest in Distributing. To arrive at that structure, Sub 1 does what [...]Read more