Tax-Free Spinoffs Could Be Much Tougher Under Proposed New Rules
![business-tax-[Converted] business-tax-[Converted]](https://groco.com/wp-content/uploads/2021/02/business-tax-Converted.png)
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
The Happiness Hall of Fame | Mike Duffy
About Mike Duffy Mike Duffy is an evangelist for happiness. Mike has written 4 books on happiness including, The Happiness Book For Men. He has been researching happiness for 30 years. He loves to speak about how you can gain greater happiness and joy in your precious life. Mike started The Happiness Hall Of…
Hope For America | Bob Bennett
About Bob Bennett Former Senator Bob Bennett is the chairman of Bennett Group International, a private business and governmental consulting group he founded after leaving government service in 2011. As a U.S. Senator from Utah, he was a senior member of the Senate Banking Committee and a member of the distinguished Joint Economic Committee.…
Are You Ready For Retirement? | Jason Greenwood
About Jason Greenwood In 1999 Jason started his career in the financial services industry. While at Fidelity Investments he learned the importance of diversification and how to trade effectively. As an options trader for Client Services he became adept in the stock and derivatives markets. Desiring to become more involved with clients portfolios, Jason…
The Science of Immunology | Dr. Benjamin Chen
About Dr. Benjamin Chen Dr. Benjamin Chen is the CEO and Chairman of Immune Targeting Systems (ITS), a company in the field of Immunology which is dedicating to creating vaccines for viral infections. During his career Dr. Chen has worked as a scientist, banker and entrepreneur. In addition to his duties at ITS he…