Tax Group chair Linda Swartz spoke with Law360 about recent IRS guidance limiting the types of corporate spinoffs that would qualify for tax-free status.
Among other insights, Linda noted that the guidance and the agency’s accompanying notice represent a “sea change,” with the notice’s “aggressive limiting tone” applying to a breadth of issues.
“In my experience, it is not typical to have a tax avoidance purpose for many of the actions the IRS is worried about," she said. Linda also expressed concern that complying with the standards that the government may promulgate in future proposed regulations "will make spinoffs very difficult to accomplish with an IRS ruling, even when they're permitted under the statute and case law."