Bloomberg Industries
Industry Snippets: IRS considering revising rules requiring spin-offs generate revenue to qualify for tax-free status -- Bloomberg
Bloomberg Industries
  • Bloomberg reports the IRS announced on Tuesday it was considering revising the current rules requiring spinoff units be engaged in "business involving income collection and payment of expenses for at least five years" in order to qualify for tax-free status
  • The report notes the proposed changes could be particularly beneficial for tech and pharma companies with internal assets or units not yet generating revenue, such as GOOGL and JNJ, as well as startups

“Historically, you’ve seen pharma companies do spinoffs in certain situations but usually not to split up individual lines of pharmaceuticals,” Singer said. The type of guidance the IRS is talking about “would make those sorts of transactions more feasible and practical.”

Reference Link: Bloomberg