IRS Will Again Rule on Debt Issuances Prior to a Spin-off

Posted by Kim Chen on May 21st, 2017

In an attempt to expand its private letter ruling policy, the IRS has removed certain debt issuance transactions from its list of “no rule” areas. On and after 5/9/17, the IRS will rule on whether the tax-favorable rules of IRC Secs. 355 and 361 apply to spin-off transactions in which debt issued in anticipation of the distribution is subsequently retired. The IRS has determined that issuing private letter rulings in this area would be in the interest of sound tax administration, and will continue to study the topic. Rev. Proc. 2017-3 is modified. Rev. Proc. 2017-38, 2017-22 IRB.