Care to comment on this, FWDG ?
READ BELOW:
FWDG. After reading the 8K for Yahoo, it made me rethink the ATB requirements for Section 355 spin offs. I looked into the ATB section of 355:
Quote:
(b) Requirements as to active business
(1) In general
Subsection (a) shall apply only if either—
(A)the distributing corporation, and the controlled corporation (or, if stock of more than one controlled corporation is distributed, each of such corporations), is engaged immediately after the distribution in the active conduct of a trade or business, or
(B)immediately before the distribution, the distributing corporation had no assets other than stock or securities in the controlled corporations and each of the controlled corporations is engaged immediately after the distribution in the active conduct of a trade or business.
(2) Definition
For purposes of paragraph (1), a corporation shall be treated as engaged in the active conduct of a trade or business if and only if—
(A)it is engaged in the active conduct of a trade or business,
(B)such trade or business has been actively conducted throughout the 5-year period ending on the date of the distribution,
(C)such trade or business was not acquired within the period described in subparagraph (
in a transaction in which gain or loss was recognized in whole or in part, and
(D)control of a corporation which (at the time of acquisition of control) was conducting such trade or business—
(i)was not acquired by any distributee corporation directly (or through 1 or more corporations, whether through the distributing corporation or otherwise) within the period described in subparagraph ( and was not acquired by the distributing corporation directly (or through 1 or more corporations) within such period, or
(ii)was so acquired by any such corporation within such period, but, in each case in which such control was so acquired, it was so acquired, only by reason of transactions in which gain or loss was not recognized in whole or in part, or only by reason of such transactions combined with acquisitions before the beginning of such period.
For purposes of subparagraph (D), all distributee corporations which are members of the same affiliated group (as defined in section 1504(a) without regard to section 1504(b)) shall be treated as 1 distributee corporation.
https://www.law.cornell.edu/uscode/text/26/355
Here is guidance from the IRS:
www.irs.gov/irb/2009-04_IRB/ar07.html
Based on the IRS refusal to render an opinion to YHOO based on:
Quote:
... studying potential new administrative guidance with respect to certain issues under Section 355 of the Code, including the ATB Requirement.
I doubt the IRS is loosening interpretation, and we know, interpretation is not amending that subsection.
I don't believe FWDG qualifies for a tax exempt 355 spin off.
Yikes, hello taxes FWDG shareholders.
READ BELOW:
FWDG. After reading the 8K for Yahoo, it made me rethink the ATB requirements for Section 355 spin offs. I looked into the ATB section of 355:
Quote:
(b) Requirements as to active business
(1) In general
Subsection (a) shall apply only if either—
(A)the distributing corporation, and the controlled corporation (or, if stock of more than one controlled corporation is distributed, each of such corporations), is engaged immediately after the distribution in the active conduct of a trade or business, or
(B)immediately before the distribution, the distributing corporation had no assets other than stock or securities in the controlled corporations and each of the controlled corporations is engaged immediately after the distribution in the active conduct of a trade or business.
(2) Definition
For purposes of paragraph (1), a corporation shall be treated as engaged in the active conduct of a trade or business if and only if—
(A)it is engaged in the active conduct of a trade or business,
(B)such trade or business has been actively conducted throughout the 5-year period ending on the date of the distribution,
(C)such trade or business was not acquired within the period described in subparagraph (
in a transaction in which gain or loss was recognized in whole or in part, and (D)control of a corporation which (at the time of acquisition of control) was conducting such trade or business—
(i)was not acquired by any distributee corporation directly (or through 1 or more corporations, whether through the distributing corporation or otherwise) within the period described in subparagraph (
and was not acquired by the distributing corporation directly (or through 1 or more corporations) within such period, or (ii)was so acquired by any such corporation within such period, but, in each case in which such control was so acquired, it was so acquired, only by reason of transactions in which gain or loss was not recognized in whole or in part, or only by reason of such transactions combined with acquisitions before the beginning of such period.
For purposes of subparagraph (D), all distributee corporations which are members of the same affiliated group (as defined in section 1504(a) without regard to section 1504(b)) shall be treated as 1 distributee corporation.
https://www.law.cornell.edu/uscode/text/26/355
Here is guidance from the IRS:
www.irs.gov/irb/2009-04_IRB/ar07.html
Based on the IRS refusal to render an opinion to YHOO based on:
Quote:
... studying potential new administrative guidance with respect to certain issues under Section 355 of the Code, including the ATB Requirement.
I doubt the IRS is loosening interpretation, and we know, interpretation is not amending that subsection.
I don't believe FWDG qualifies for a tax exempt 355 spin off.
Yikes, hello taxes FWDG shareholders.
