{"id":14227,"date":"2015-10-05T00:00:00","date_gmt":"2015-10-05T00:00:00","guid":{"rendered":"https:\/\/getirshelp.com\/blog\/irs-takes-a-closer-look-at-spinoffs-and-the-tax-free-exemption\/"},"modified":"2026-07-27T15:08:17","modified_gmt":"2026-07-27T15:08:17","slug":"irs-takes-a-closer-look-at-spinoffs-and-the-tax-free-exemption","status":"publish","type":"post","link":"https:\/\/getirshelp.com\/blog\/irs-takes-a-closer-look-at-spinoffs-and-the-tax-free-exemption\/","title":{"rendered":"IRS Takes a Closer Look at Spinoffs and the Tax-Free Exemption"},"content":{"rendered":"<p>Stop losing sleep over your tax situation. I&#039;m Darrin Mish \u2014 a tax attorney in Tampa who&#039;s spent 32 years handling exactly this kind of problem. Here&#039;s what you need to know.<\/p>\n<p>Normally taxes are applied when a corporation distributes property on behalf of its shareholders. As such, shareholders and the distributing corporation are required to pay taxes.<\/p>\n<p>However, <a href=\"http:\/\/www.wsj.com\/articles\/irs-raises-red-flag-on-real-estate-spinoffs-1442359003\" target=\"_blank\" rel=\"noopener\">the spinoff provision of Section 355<\/a> of the Internal Revenue Service Code allows such a transaction to be tax-free if certain requirements are met. One such requirement is called the \u201cbusiness purpose.&#8221; \u00a0This business purpose must be beyond the spin-threshold requirements for tax-free reorganizations in general.<\/p>\n<p><span class=\"pullquote\">A second requirement for a tax-free spinoff is that the transaction will not be used as the cause for distributing profits and earnings. While there may be a number of reasons for a real estate spinoff, the main goal is to increase value for shareholders for both the spin and the parent. <\/span><\/p>\n<p>The parent company usually determines that the property is no longer as financially productive, and that the spin will increase the value of the property that\u2019s left. Showing proof that the transaction isn\u2019t just to make a tax-free profit is where the challenge arises for companies spinning off properties. Both the transactions and the laws governing these transactions can be complicated.<\/p>\n<p>It takes a real estate, legal and tax expert to fully understand the nuances involved.<\/p>\n<p>Check out more <a href=\"https:\/\/getirshelp.com\/blog\/category\/irs-news\/\">IRS News<\/a> stories by clicking that link.<br \/>\n<div class=\"rank-math-contact-info wpseo_map_compat\"><\/div><div class=\"clear\"><\/div><div class=\"rank-math-contact-info wpseo_address_compat show-address show-address-only\"><div class=\"rank-math-contact-section rank-math-contact-address\"><\/div><\/div><div class=\"clear\"><\/div><div class=\"rank-math-contact-info wpseo_opening_hours_compat\"><\/div><div class=\"clear\"><\/div><\/p>\n","protected":false},"excerpt":{"rendered":"<p>Stop losing sleep over your tax situation. I&#039;m Darrin Mish \u2014 a tax attorney in Tampa who&#039;s spent 32 years handling exactly this kind of problem. Here&#039;s what you need to know. Normally taxes are applied when a corporation distributes property on behalf of its shareholders. As such, shareholders and the distributing corporation are required [&hellip;]<\/p>\n","protected":false},"author":2,"featured_media":0,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"rop_custom_images_group":[],"rop_custom_messages_group":[],"rop_publish_now":"initial","rop_publish_now_accounts":[],"rop_publish_now_history":[],"rop_publish_now_status":"pending","footnotes":""},"categories":[591],"tags":[],"class_list":["post-14227","post","type-post","status-publish","format-standard","hentry","category-irs-news"],"_links":{"self":[{"href":"https:\/\/getirshelp.com\/blog\/wp-json\/wp\/v2\/posts\/14227","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/getirshelp.com\/blog\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/getirshelp.com\/blog\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/getirshelp.com\/blog\/wp-json\/wp\/v2\/users\/2"}],"replies":[{"embeddable":true,"href":"https:\/\/getirshelp.com\/blog\/wp-json\/wp\/v2\/comments?post=14227"}],"version-history":[{"count":1,"href":"https:\/\/getirshelp.com\/blog\/wp-json\/wp\/v2\/posts\/14227\/revisions"}],"predecessor-version":[{"id":22657,"href":"https:\/\/getirshelp.com\/blog\/wp-json\/wp\/v2\/posts\/14227\/revisions\/22657"}],"wp:attachment":[{"href":"https:\/\/getirshelp.com\/blog\/wp-json\/wp\/v2\/media?parent=14227"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/getirshelp.com\/blog\/wp-json\/wp\/v2\/categories?post=14227"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/getirshelp.com\/blog\/wp-json\/wp\/v2\/tags?post=14227"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}