IRS Proposes Reporting Requirements for Corporate Spin-offs (1)

The IRS proposed regulations Monday that would require multiyear tax reporting for corporate spin-offs and related transactions.

According to the proposed rules (REG-116085-23, RIN 1545-BR00), companies would have to supply information establishing its position that a corporate spin-off or related transactions qualify for nonrecognition treatment under subchapter C of the Internal Revenue Code.

Section 355 of the tax code allows companies to spin off a subsidiary into a new company without tax consequences if they meet certain criteria. The IRS put stricter limits on tax-free spin-offs and curtailed private letter rulings in May, garnering criticism from practitioners who ...