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
The State of the Private Equity Industry—Is It All Down Hill From Here?
In the past private equity has been a solid way of investing taking in trillions of capital, but with the ever changing world we live in, what is the state of the industry? Private equity investments typically consist of money being placed in a company by venture capital firms, private equity firms or angel…
How the Wealthy Save on Taxes
Whether you make minimum wage or you’re in the richest 1 percent of earners, every taxpayer likes to keep as much of his or her hard-earned income as possible. There are hundreds of ways to save on taxes and many of these strategies are universal to all taxpayers no matter which tax bracket they…
How the Internet Became Commercial
What’s Behind the Commercial movement of the Internet? Believe it or not the Internet was not originally created to share your life on social media sites like Facebook and Instagram or to watch movies, play games or follow your favorite pastime. When it was first invented, the military and research universities were the primary…
Critical Decisions When Launching a Startup
There are countless aspects to launching a startup company. To do it successfully a founder has to make many critical decisions and be right on most of them. Many entrepreneurs have a great idea or product with great plans to make it successful. However, they don’t make the right business decisions, which leads to their…