Proposal on Nonrecognition of Gain or Loss Issued by IRS (1)

The IRS and Treasury Department released proposed guidance relating to nonrecognition of gains or losses in certain corporate transactions.

The proposed rules (REG-112261-24,RIN 1545-BR32) contain guidance regarding corporate separation, incorporations, and reorganizations qualifying for nonrecognition of gain or loss under Section 355, which addresses nonrecognition treatment of certain transactions. The current tax code said transactions may occur tax-free if they meet criteria under Section 355, and they can exist in the form of spin-off, split-off, or a split-up, according to the IRS.

The proposed regulations aim to establish formal core definitional and operative provisions for corporations ...