Description
Taxpayers can avoid federal income tax on corporate spin-offs under Section 355 of the Internal Revenue Code. Failure to meet the requirements of Section 355 either before or after the transaction can cause a spin-off to be taxable to the distributing parent company or the distributing parent's stockholders.
If 50 percent or more of the vote or value of a parent company is spun off as part of a "prohibited plan," the spin-off is taxable to the distributing parent. Any acquisition that occurs during the two years before or after a spin-off transaction may be deemed part of a prohibited plan, while an acquisition that fits within one of several regulatory safe harbors is not treated as part of such a plan.
An alternative to a "safe-harbor deal" is a transaction where former stockholders of the distributing parent continue to own more than 50 percent of the corporation involved in the spin-off. In a Reverse Morris Trust transaction, a merger partner merges with the distributing parent or spun-off subsidiary immediately after the spin-off in a tax-free transaction to achieve this result.
Listen as our authoritative panel discusses Reverse Morris Trust transactions and other structuring alternatives to avoid federal taxation on corporate spin-offs to the parent company or its shareholders.
Presented By
Mr. Bodoh advises clients on cross-border mergers, acquisitions, inversions, spin-offs, other divisive strategies, restructurings, bankruptcy and non-bankruptcy workouts, the use of net operating losses, foreign tax credits, deficits and other tax attributes, and consolidated return matters.
Mr. Dixon is an investment banker and Managing Director at Citigroup Global Markets Inc., where he focuses on tax-advantaged domestic and cross-border M&A transactions, capital structure solutions and financings for public and private companies, including mergers, acquisitions, divestitures, buy-outs, and SPAC transactions. He also is a member of the firm’s Fairness Opinion Committee.
Mr. Dixon has served as an adjunct assistant professor at Brooklyn Law School and taught classes on the taxation of securities and derivatives and the taxation of partnerships. He has also taught as an adjunct at the Peter J. Tobin School of Business at St. John’s University and has given guest lectures for classes at Harvard Law School and NYU’s Leonard N. Stern School of Business
Mr. Dixon currently serves on the Board of Directors of the International Tax Institute, is a member of the New York Steering Committee of the International Fiscal Association, and was formerly Chair of the U.S. Activities of Foreigners and Tax Treaties Committee of the ABA’s Section of Taxation. He is also a former John S. Nolan Fellow and also served on the ABA’s Task Force on International Tax Reform. Will speaks frequently about Federal income tax matters.
Prior to joining Citigroup, Mr. Dixon was a Senior Attorney at Cravath, Swaine & Moore LLP, a law firm in New York City; he earned his J.D. (magna cum laude) from Boston University School of Law.
Mr. Zywan focuses on the federal income taxation of domestic and cross-border mergers, acquisitions, spin-offs, other divisive strategies, restructurings, and acquisition financing, with a particular emphasis on corporate tax planning, the utilization of net operating losses and other tax attributes, and consolidated return matters.
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This 90-minute webinar is eligible in most states for 1.5 CLE credits.
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Date + Time
- event
Wednesday, October 5, 2022
- schedule
1:00 p.m. ET./10:00 a.m. PT
- Taxation of corporate spin-offs generally: to company, shareholders
- IRC Section 355
- Prohibited transactions
- Safe harbors
- Structuring a Reverse Morris Trust
The panel will review these and other vital issues:
- What kinds of spin-offs and split-offs are taxable to a company or its shareholders?
- What safe harbors are available under Section 355 to avoid tax on a spin-off transaction?
- How is a Reverse Morris Trust structured, and what are the pitfalls to be avoided?
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