For over 50 years, Bloomberg BNA’s renowned flagship daily news service, Daily Tax Report® has helped leading practitioners and policymakers stay on the cutting edge of taxation and...
Feb. 2 — Yahoo! Inc. is slowing down plans to spin off its core business—and turning toward a possible sale—after expectations of a tax-free transaction waned.
The reverse spin is “likely” to be taxable, rather than the tax-free transaction the company originally planned, Chief Financial Officer Kenneth A. Goldman said Feb. 2 on a conference call. The company is exploring “additional strategic options” while it continues to pursue the spinoff plan.
The reverse spin is still seen as the “most viable” option, Chief Executive Office Marissa Mayer said. Goldman said a spinoff could take up to a year to complete, and is “confident” it will be finished in 2016.
This obstacle in Yahoo's spinoff saga, which is entering its second year, could be seen as a boon for the Internal Revenue Service. The agency began in September studying transactions where the active trade or business is relatively small, or where there is a large proportion of investment assets, in response to an increasing number of requests for rulings on what the IRS considered to be aggressive interpretations of tax-free spinoffs under tax code Section 355.
Yahoo announced a plan in February 2015 to separate its stake in Alibaba Group Holding Ltd., and had intended to complete the deal before the end of 2015. After the IRS declined to give the company a letter ruling confirming tax aspects of the transaction, Yahoo announced a reverse spin to separate the company's core business in December (239 DTR G-2, 12/14/15).
The IRS could issue rules in coming months that could stymie Yahoo's spinoff plan. The IRS guidance is expected to address issues tied to business purpose, active trade or business, and the device test, which doesn't allow spinoffs to be used as a means to distribute earnings and profits to shareholders. A Treasury Department official said in January that the IRS is “very actively” working on guidance, though didn't comment on timing (21 DTR G-6, 2/2/16).
To contact the reporter on this story: Laura Davison in Washington at firstname.lastname@example.org
To contact the editor responsible for this story: Brett Ferguson at email@example.com
All Bloomberg BNA treatises are available on standing order, which ensures you will always receive the most current edition of the book or supplement of the title you have ordered from Bloomberg BNA’s book division. As soon as a new supplement or edition is published (usually annually) for a title you’ve previously purchased and requested to be placed on standing order, we’ll ship it to you to review for 30 days without any obligation. During this period, you can either (a) honor the invoice and receive a 5% discount (in addition to any other discounts you may qualify for) off the then-current price of the update, plus shipping and handling or (b) return the book(s), in which case, your invoice will be cancelled upon receipt of the book(s). Call us for a prepaid UPS label for your return. It’s as simple and easy as that. Most importantly, standing orders mean you will never have to worry about the timeliness of the information you’re relying on. And, you may discontinue standing orders at any time by contacting us at 1.800.960.1220 or by sending an email to firstname.lastname@example.org.
Put me on standing order at a 5% discount off list price of all future updates, in addition to any other discounts I may quality for. (Returnable within 30 days.)
Notify me when updates are available (No standing order will be created).
This Bloomberg BNA report is available on standing order, which ensures you will all receive the latest edition. This report is updated annually and we will send you the latest edition once it has been published. By signing up for standing order you will never have to worry about the timeliness of the information you need. And, you may discontinue standing orders at any time by contacting us at 1.800.372.1033, option 5, or by sending us an email to email@example.com.
Put me on standing order
Notify me when new releases are available (no standing order will be created)