Revised Temp. Regs. may ease anti-Morris Trust rule effects

The IRS issued revised Temp. Regs. Sec. 1.355-7T, effective for distributions after April 26, 2002. In Aug. 2001, the IRS issued temporary regulations that contained a number of safe harbors that planners could use to avoid triggering gain recognition under Sec. 355(e). The Temp. Regs. Sec. 1.355-7T...

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Bibliographic Details
Published in:The Tax Adviser 2002-09, Vol.33 (9), p.560
Main Author: Hetzer, B. Todd
Format: Magazinearticle
Language:English
Subjects:
Acquisitions and mergers
Agreements
Alliances
Business purpose doctrine
Corporate divestiture
Corporations
Gain recognition
Harbors
Ownership changes
Safe harbor
Stockholders
Taxation
Temp. Reg. 1.355-7T
Temporary tax regulations
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Summary:The IRS issued revised Temp. Regs. Sec. 1.355-7T, effective for distributions after April 26, 2002. In Aug. 2001, the IRS issued temporary regulations that contained a number of safe harbors that planners could use to avoid triggering gain recognition under Sec. 355(e). The Temp. Regs. Sec. 1.355-7T delete the provision in the 2001 proposed regulations that a business purpose would exist if within 6 months after the distribution, an acquisition occurred, or an agreement, understanding, arrangement or substantial negotiations existed. The changes to the revised temporary regulations, particularly the safe harbors, are more favorable for planning purposes than the prior temporary regulations.
ISSN:0039-9957