Spin-offs are not taxed if the shareholders of the parent company are given at least
A)90 percent of the shares in the new company.
B)80 percent of the shares in the new company.
C)70 percent of the shares in the new company.
D)60 percent of the shares in the new company.

Question

Quizplus · Accepted Answer

In the United States, for a spin-off to be tax-free, the parent company must distribute at least 80 percent of the shares of the spun-off entity to its shareholders. This requirement ensures that the parent company's shareholders maintain a significant stake in the new company, aligning with IRS regulations for tax-free spin-offs.

Spin-Offs Are Not Taxed If the Shareholders of the Parent