IRS Tax-Free Spinoff Proposal Coming Soon as Criticism Continues

Proposed regulations are coming soon for tax-free corporate spinoff transactions, an IRS official said against a background of continued cries that the most recent guidance on the topic is unworkable.

The regulations, under tax code Section 355, are “pretty far along,” said Mark Weiss, branch chief in the IRS Office of Chief Counsel, in a Tuesday panel at the New York University Institute on Federal Taxation.

Section 355 allows companies to spin off a subsidiary into a new company without tax consequences if they meet certain criteria. Many companies use the transactions to pay down debt.

The IRS has ...