IRS Prop. Reg.: ABA Tax Submits Comments on Spin-off Rules (IRC §355)

The American Bar Association Tax Section March 19 released comments on REG-134016-15 that would clarify device prohibition and active business requirement. The approach of the current regulations with respect to the allocation of non-business assets generally is the correct approach, and the mechanical approach regarding the allocation of non-business assets adopted by REG-134016-15 does not adequately take into account the corporate-level business objectives motivating a distribution and the allocation of assets between Distributing and Controlled and would have the effect of disallowing many relatively common, non-abusive transactions, contrary to the intent of Congress in enacting the Device Prohibition, the Tax ...