Taxpayers Get Two Breaks From IRS on Tax-Free Corporate Spinoffs

Tax practitioners who opposed the IRS’s proposed regulations on corporate spinoffs got what they wanted—twofold.

The IRS on Monday rescinded two sets of regulations it proposed in January on how companies could ensure their spinoffs and similar transactions are tax-free. That was a win for taxpayers and practitioners who complained the proposed rules were too burdensome and broad. But they were still concerned about IRS limitations on individual private letter rulings—the current method for getting approval for tax-free transactions.

Six hours later, the IRS allayed those concerns, by issuing guidance that lifted restrictions on spinoff PLRs that it imposed last ...