IRS Mulls Treatment of Split-Off Gains Under New Book-Income Tax

The IRS is considering the issue of how gains from corporate split-off transactions will be treated under the new book-income tax, an agency official said Tuesday.

Split-offs under tax code Section 355 can qualify for tax-free treatment, but they result in gains that increase a company’s financial-statement income and thus could be taxable under the new 15% minimum tax on financial-statement income. EY and the Alliance for Competitive Taxation have both argued in comments to the Treasury Department that it would be inconsistent for gains from tax-free split-offs to be taxed under the book-income tax.

• The government has “heard loud ...