The US Department of the Treasury (Treasury Department) and the IRS recently released Revenue Procedure 2024-24 (Revenue Procedure) and Notice 2024-38 (Notice) establishing revised standards and procedures for taxpayers seeking private letter rulings for spin-offs intended to qualify for tax-free treatment under Section 355 of the Internal Revenue Code (Code). Much of the Revenue Procedure and Notice revolve around the treatment of debt of the distributing corporation (Distributing) and the distributed corporation (Controlled) in a tax-free spin-off. The Notice describes the views and concerns of the Treasury Department and the IRS relating to certain matters addressed in the Revenue Procedure, many of which represent departures from the IRS’s previous ruling practice, particularly with respect to the treatment of Distributing and Controlled debt in a tax-free spin-off. The changes generally make it more difficult to obtain a private letter ruling with respect to certain spin-off issues. Taxpayers, therefore, may need to rely on tax opinions rather than private letter rulings in certain spin-offs, resulting in less certainty.
- Posted in: Market Updates
- Tagged in: Tax
