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

Recording of a 90-minute premium CLE/CPE webinar with Q&A

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Conducted on Wednesday, March 30, 2016

Recorded event now available

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Course Materials

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.


Corporate divestitures or “spin-offs” remain a preferred tactic for freeing up shareholder value and restructuring a company’s operations. Spinoff transactions that conform to the terms of IRC 355 qualify for tax-deferral treatment. However, the IRS 2013 announcement that it would no longer issue full coverage private letter rulings (PLRs), which essentially “blessed” the transaction prior to its completion, had a direct effect on spin-off planning. Additionally, Congress’ intention to eliminate the tax-favored treatment of certain REIT spin-offs further complicates matters.

IRC Section 355 and its regulatory guidance set the framework for tax deferral on spin-off transcations; failure to comply with these complex rules can mean a significant tax cost if the transaction fails to qualify for deferral treatment.

Since announcing it would no longer issue PLRs, the IRS has increased its scrutiny of spin-off transactions, creating new difficulties in structuring tax-free divestitures. Recent announcements on REIT spin-offs will present additional challenges to tax counsel and advisors in structuring divestitures.

Listen as our experienced panel discusses the tax impact of various divestment transaction structures, provides best practices for minimizing transaction taxes, and explores post-divestment tax opportunities.



  1. Structuring concerns in the absence of IRS private letter ruling guidance
  2. Legitimate business purpose requirement to qualify for tax-free treatment
  3. Pre-spin transactions
  4. Sales in connection with spin-offs—avoiding 355(e) prohibitions
  5. Capital structure
  6. Tax sharing/tax matters agreements


The panel will review these and other important issues:

  • Evaluating the need for pre-divestiture transactions to achieve optimal tax treatment
  • Identifying and avoiding divestiture pitfalls
  • Planning requirements in the absence of advance IRS guidance
  • Current state of Section 355 spin-offs and split-offs
  • “North-south” and “control” issues
  • Anticipated Congressional/IRS action regarding REIT spin-offs


Hough, Jessica
Jessica A. Hough

Skadden Arps Slate Meagher & Flom

Ms. Hough represents clients on a wide range of tax matters, with particular emphasis on mergers, acquisitions and...  |  Read More

Scott M. Levine
Scott M. Levine

Jones Day

Mr. Levine advises on the tax aspects of corporate transactions, including international and domestic mergers and...  |  Read More

Norman, Elizabeth
Elizabeth M. Norman

Nutter McClennen & Fish

Structuring of complex acquisitions and dispositions of domestic and international holdings, including public and...  |  Read More

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