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IRS Mulls Easing Letter Ruling Guidance on Spinoff Debt Swaps

Jan. 13, 2021, 6:04 PM

The IRS is considering expanding the timeframe in which corporations must complete debt exchanges following tax-free spinoffs under existing standards for obtaining private letter rulings, an agency official said.

PLRs are written statements the IRS provides to taxpayers confirming in advance the tax consequences of a particular transaction. The IRS in October 2018 released guidance (Rev. Proc. 2018-53) that provides procedures for companies seeking PLRs on tax-free spinoffs with a debt exchange component.

  • That guidance generally says debt exchanges must be executed within 180 days of the related spinoff transaction, absent proof that a more delayed exchange...

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