IRS PLR: Post-Spin-Off Stock Repurchase Transaction Subject to Same Analysis as Otherwise Similar Stock Repurchase (IRC §355)

For purposes of tax code Section 355(a)(1)(B) and regulations, a publicly traded corporation’s (“Distributing”) proposed transaction will be subject to the same analysis as an otherwise similar Distributing repurchase of its stock on the open market, the IRS ruled. Distributing formed a controlled corporation, contributed certain business assets and liabilities to it, and distributed all of Controlled’s stock to Distributing shareholders, then made (on three dates) open market repurchases of the shares, such spin-off represented to qualify as tax-free to Distributing and shareholders under Section 355, Section 361, and Section 368(a)(1)(D). Distributing proposes ...