IRC Section 355 Corporate Spin-Off Transactions: Optimizing Tax Treatment in Divestitures

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Course Details

Course Information

smart_display Format
On-Demand
signal_cellular_alt Difficulty Level
Intermediate
work Practice Area
Tax Law

Date & Time

event Date
Thursday, October 24, 2024
schedule Time
1:00 p.m. ET./10:00 a.m. PT
timer Program Length
90 minutes

Credit Information

This 90-minute webinar is eligible in most states for 1.5 CLE credits.
BARBRI is a NASBA CPE sponsor and this 110-minute webinar is accredited for 2.0 CPE credits.
BARBRI is an IRS-approved continuing education provider offering certified courses for Enrolled Agents (EA) and Tax Return Preparers (RTRP).

$347.00

This course will provide tax counsel with a practical guide to the key tax considerations in structuring corporate spin-offs and carve-outs. The panel will examine key legal, business, and tax considerations for deal structuring, economic terms, due diligence, asset transfers, and more.

Faculty

Joseph M. Pari

Partner

Weil Gotshal & Manges LLP

Mr. Pari is Co-Chair of Weil’s Tax Department and is based in New York and Washington, D.C. He has extensive experience advising on federal income taxation of domestic and cross-border mergers, acquisitions, spin-offs, other divestiture types, restructurings, bankruptcy and non-bankruptcy workouts, acquisition financing and the use of pass-through entities in acquisitive and divisive transactions, with a particular emphasis on corporate tax planning, the utilization of net operating losses and other tax attributes and consolidated return matters. Mr. Pari is on Bloomberg Industry Group's Corporate Taxation Advisory Board and the New York University Institute on Federal Taxation advisory board and is an adjunct faculty member at the Georgetown University Law Center. He is a frequent speaker on tax issues relating to mergers and acquisitions, spin-offs and other divestitures, corporate tax planning, workouts and consolidated return matters.

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Amie Colwell Breslow

Of Counsel

Jones Day

Ms. Breslow practices across a broad range of U.S. federal tax matters, including cross-border mergers, acquisitions, spin-offs, and other divisive strategies and restructurings. She has extensive experience working with large multinational companies on managing and executing complex, multi-step reorganizations and divestures, developing workable policies at an industry-wide level in response to global economic policy initiatives and changes in foreign tax and corporate law, and advising clients on token offerings and entity structures. As a former in-house tax counsel and attorney at the Office of Associate Chief Counsel (Corporate), Ms. Breslow blends substantive tax knowledge with an understanding of corporate objectives, and first-hand insights on the guidance and publications process.

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Description

Corporate divestitures or "spin-offs" remain a preferred method to free up shareholder value and restructure a company's operations. Spin-off transactions that conform to the terms of IRC 355 qualify for tax-deferral treatment. Failure to comply with these complex rules can mean a significant tax cost if the transaction fails to qualify for deferral treatment.

Given the significant potential costs of a failed spin-off, taxpayers may seek a private letter ruling (a PLR) from the IRS, effectively blessing a spin-off prior to its completion. From 2013 to 2017, the IRS would generally only issue "significant issue" PLRs regarding spin-offs. However, the IRS has in recent years once again begun issuing so-called "transactional" rulings that confirm the qualification of many (but not all) of the basic requirements under IRC Section 355.

Listen as our experienced panel discusses the tax impact of various transaction structures, provides best practices for minimizing transaction taxes, and explores various techniques to establish appropriate capital structures as well as pursue post-divestment opportunities. The panel will also discuss the interaction of the corporate alternative minimum tax with the spin-off rules and legislative proposals in the Green Book implicating spin-offs.

Outline

Legitimate business purpose requirement to qualify for tax-free treatment
Requirement of two (at least) actively conducted businesses
Sales in connection with spin-offs--avoiding 355(e) prohibitions
Capital structure
Tax sharing/tax matters agreements

Benefits

The panel will review these and other important issues:

Identifying and avoiding divestiture pitfalls
Proceeding with or without a PLR
Current state of Section 355 spin-offs and split-offs
IRS approach on debt allocation transactions
Active trade or business issues
Potential legislative changes regarding monetization restrictions and a potential new "capital adequacy" requirement for spin-offs

NASBA Details

Learning Objectives

After completing this course, you will be able to:

Identify the transaction tax impact of various divestiture plans
Identify and deal with potential tax pitfalls accompanying divestment transactions
Understand processes for structuring transactions to qualify for tax deferral treatment
Recognize tax-saving opportunities for both the selling and divested companies after divestment transactions

Field of Study: Taxes
Level of Knowledge: Intermediate
Advance Preparation: None
Teaching Method: Seminar/Lecture
Delivery Method: Group-Internet (via computer)
Attendance Monitoring Method: Attendance is monitored electronically via a participant's PIN and through a series of attendance verification prompts displayed throughout the program
Prerequisite: Three years+ business or professional experience at mid-level within the organization, preparing complex tax forms and schedules. Specific knowledge and understanding of international taxation, deferred foreign-source income, earnings and profits, controlled foreign corporations, specified foreign corporations, and repatriation of deferred foreign earnings; familiarity with accumulated cash and non-cash retained earnings and profits and netting of earnings and profits positions.

Strafford Publications, Inc. is registered with the National Association of State Boards of Accountancy (NASBA) as a sponsor of continuing professional education on the National Registry of CPE Sponsors. State boards of Accountancy have final authority on the acceptance of individual courses for CPE Credits. Complaints regarding registered sponsons may be submitted to NASBA through its website: www.nasbaregistry.org.