IRC 355: Understanding Basics, Tax-Free Spin-off
One exception where a corporation is permitted to distribute appreciated property to its shareholders in a tax-free manner is via qualified spin-off under IRC 355.
Provided a series of requirements are met, Section 355 can be an excellent option for corporations and their shareholders who are looking to restructure by providing a vehicle to do so tax-free in a type of transaction that otherwise would have created a taxable event. Read this article to learn more.
Authors: Bill Ruffner, CPA and Mike Tighe, CPA of Global Tax Management in PA CPA Journal