Spin-off Rules Balance Flexibility With Oversight, Treasury Says

The new proposed regulations on tax-free corporate spin-offs are aimed at giving taxpayers the most flexibility possible while making sure the IRS maintains sufficient oversight, a Treasury Department official said Tuesday.

“We took a hard look at all the transactions and asked ourselves ‘how can we make it work,’” said Colin Campbell, associate tax legislative counsel in Treasury’s Office of Tax Policy, speaking on a panel at a New York State Bar Association conference.

The proposed rules, issued late Monday, cover spin-offs and similar transactions under Section 355, which allows companies to spin off a subsidiary into a ...