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

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

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Conducted on Thursday, August 17, 2017

Recorded event now available

or call 1-800-926-7926

This course 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.

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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?

Faculty

Broome, Gregory
Gregory P. Broome
Partner
Wilson Sonsini Goodrich & Rosati

Mr. Broome’s practice focuses on partnership and corporate taxation matters, including significant experience in...  |  Read More

Devin J. Heckman
Devin J. Heckman
Wilson Sonsini Goodrich & Rosati

Mr. Heckman advises clients on the tax aspects of domestic and cross-border mergers and acquisitions, tax-free...  |  Read More

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