Revenue Ruling 2017-09: New IRC 355 North-South Spinoff Transaction Guidance and Resumption of Private Letter Rulings

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


Conducted on Thursday, August 17, 2017
Recorded event now available


This webinar will provide tax counsel with a critical look at recent IRS guidance on “north-south” transactions in connection with tax-free spin-offs, issued in Rev. Rul. 2017-09. The panel will discuss the facts presented in the ruling under which the IRS will respect the separate steps of a north-south transaction. The webinar will also detail continued areas of uncertainty as to whether transactions qualify for Section 355 treatment and offer strategies on when counsel should consider seeking a private letter ruling.

Description

On May 3, 2017, the IRS issued Rev. Rul. 2017-09, offering guidance in the federal tax treatment of certain “north-south” transactions in connection with tax-free spin-offs. This ruling reversed the IRS’s previously announced course, specifying that the IRS would resume issuing private letter rulings on whether these “north-south” transactions would be integrated or respected as separate for federal income tax purposes.

A north-south transaction involves both the contribution of assets to and the distribution of assets from a corporation pursuant to the same overall plan. The transactions are often structured with the intent of non-recognition treatment as a corporate spinoff under IRC 355 or with the intent of a nontaxable intercompany distribution under IRC 301.

However, the IRS has long reserved the right to integrate the contribution and distribution. Complicating matters for tax counsel, since 2013 the IRS has not issued private letter rulings for any north-south spinoff transaction.

The recent revenue ruling presents fact-pattern examples of when a north-south transaction will, and will not, qualify for tax-deferral treatment, and announces that the IRS will resume issuing PLRs, since these spinoff transactions are no longer on their list of issues under study. The guidance, however, is limited and does not cover all types of contemplated spinoffs. Failure to comply with these complex rules could result in a significant tax cost.

Listen as our experienced panel discusses the impact of the new IRS guidance on north-south transaction structures, including strategies on when to pursue private letter rulings in advance of contemplated transactions.

Outline

  1. Structures of north-south transactions in connection with tax-free spin-offs
  2. Prior IRS guidance
  3. Rev. Rul. 2017-09
    1. What type of exchange will be respected as separate transactions qualifying for non-recognition under Section 355?
    2. What type of exchange does Rev. Rul. 2017-09 specifically mention as likely to be integrated?
  4. Identifying circumstances where a private letter ruling may be appropriate prior to structuring a north-south transaction

Benefits

The panel will discuss these and other important questions:

  • What types of common north-south transactions in connection with tax-free spin-offs will be respected as separate? Which ones won’t?
  • What types of circumstances should prompt tax counsel to seek a private letter ruling prior to a contemplated north-south transaction?

Learning Objectives

After completing this course, you will be able to:

  • Recognize transaction structures that Rev. Rul. 2017-09 states will be respected as separate steps
  • Discern circumstances where the IRS will seek to integrate the two parts of a north-south transaction
  • Identify scenarios where counsel should seek a private letter ruling prior to implementing a north-south transaction

Faculty

Gregory P. Broome, Partner
Wilson Sonsini Goodrich & Sonsini, San Francisco

Mr. Broome's practice focuses on partnership and corporate taxation matters, including significant experience in mergers and acquisitions, initial public offerings, and renewable energy and project development and finance. He has spoken at several conferences on the topics of mergers and acquisitions, utility financing, and the use of partnerships and limited liability companies.

Devin J. Heckman
Wilson Sonsini Goodrich & Rosati, Palo Alto, Calif.

Mr. Heckman advises clients on the tax aspects of domestic and cross-border mergers and acquisitions, tax-free reorganizations, spin-offs, restructurings, financings, and joint ventures. He previously practiced at Simpson Thacher & Bartlett in New York.


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Tax Law Advisory Board

Robert S. Barnett

Partner

Capell Barnett Matalon & Schoenfeld

William H. Byrnes

Associate Dean, Special Projects

Texas A&M University Law

Robert A.N. Cudd

Senior Partner

Polsinelli

Patrick Derdenger

Tax Partner

Steptoe & Johnson

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Principal

Cummings & Lockwood

Lynn Fowler

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Kilpatrick Townsend & Stockton

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Morrison & Foerster

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Hinckley Allen

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Waller Lansden Dortch & Davis

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Alston & Bird

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BakerHostetler

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Smith Gambrell & Russell

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Suzanne Ross McDowell

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Steptoe & Johnson

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Sutherland Asbill & Brennan

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Lowndes Drosdick Doster Kantor & Reed

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