IRS withdraws prop. regs. affecting corporate spinoff transactions

The IRS on Monday withdrew two sets of proposed regulations issued in January, one for certain corporate spinoff transactions (REG-112261-24) and another that would have required multiyear tax reporting for such transactions (REG-116085-23).

The first set of proposed regulations was under Secs. 355, 357, 361, and 368 and addressed certain matters relating to corporate separations, incorporations, and reorganizations qualifying, in whole or in part, for nonrecognition of gain or loss.

The second set of proposed regulations would have required multiyear tax reporting for corporate separations and related transactions to establish the taxpayer’s position that the corporate separation and related transactions qualify for nonrecognition treatment under Subchapter C of the Code.

The IRS said it withdrew the proposed regulations, which would have affected corporations and their shareholders and security holders, in response to several comments that it had received “which generally were critical of the proposed guidance.”

Revenue procedure for taxpayers requesting Sec. 355 private letter rulings

Also on Monday, the IRS issued Rev. Proc. 2025-30, superseding Rev. Proc. 2024-24, which provides procedures for taxpayers that request private letter rulings from the IRS after Sept. 29 about certain issues pertaining to transactions intended to qualify under Sec. 355. The revenue procedure includes the representations, information, and analysis that taxpayers requesting these rulings should submit to the IRS.

The revenue procedure also modifies Rev. Proc. 2025-1 and Rev. Proc. 2017-52 and revokes Notice 2024-38.

— To comment on this article or to suggest an idea for another article, contact Martha Waggoner at Martha.Waggoner@aicpa-cima.com.