Tax-Free Spinoffs Could Be Much Tougher Under Proposed New Rules
![business-tax-[Converted]](https://groco.com/wp-content/uploads/2021/02/business-tax-Converted.png "business-tax-[Converted]")
Many U.S. companies take advantage of lower foreign taxes by creating tax-free spinoffs of their parent companies. It’s a great and legal way to lower their corporate tax bills. However, some lawmakers have long pressed for changes to these rules and it appears that changes could be coming.
The U.S. Treasury Department recently proposed some new rules that would make it more difficult for companies to create certain kinds for spinoffs. In order to avoid capital gains taxes on the transaction 5 percent of the amount of a spin-off must be an active trade or business.
The new proposed rules also aim to clear up the factors that determine when a spinoff cannot be used for distributing profits and earnings to shareholders. If the new rules pass, the transaction would be deemed a device if there was a large enough gap between the amount of the company that is made up of nonbusiness assets while the other company had a lot less.
At this point the new rules have only been proposed and they will not take effect unless the Treasury Department makes them official. Even at that time they still wouldn’t affect any transactions that were already planned before approval even if the transaction was finalized after.
http://www.wsj.com/articles/new-treasury-rules-would-make-it-harder-to-complete-tax-free-spinoffs-1468500481
Reducing Risk With a Diversified Portfolio
Reducing Risk With a Diversified Portfolio Have you been worried about the stock market’s recent volatility? You’re not alone. The stock market in March was a roller-coaster ride that served as a reminder to investors that the market’s ups and downs can be a little dizzying. But a volatile market should not leave you feeling…
Are You Defining Items in QuickBooks Correctly?
[vc_row][vc_column][vc_column_text] Create item records in QuickBooks carefully, and QuickBooks will return the favor by running useful, accurate reports. Figure 1: Clearly-defined items result in precise reports. Obviously, you’re using QuickBooks because you buy and/or sell products and/or services. You want to know at least weekly — if not daily — what’s selling and what’s…
Saving Money for College: Education Credits
Saving Money for College: Education Credits Education credits are tax credits available for qualified education expenses paid by the taxpayer in the furthering of their education. Qualified education expenses are defined as an expense paid during the tax year for tuition and fees required by an eligible educational institution for student enrollment and attendance. Room…
Thinking About Giving up Your U.S. Citizenship? Think Twice
Thinking About Giving up Your U.S. Citizenship? Think Twice While not a lot of people ever entertain the thought of giving up their U.S. citizenship, there are more people every year that are making that choice. Among them are several wealthier people whose main reason for renouncing is to escape the country’s overloaded tax system;…