Leveraged Spin-Offs: Tax Considerations | Practical Law
A discussion of the relevant US federal income tax considerations in a leveraged spin-off transaction. This Note discusses the general requirements for tax-free treatment of a spin-off structured as a divisive D reorganization, private letter rulings for spin-offs involving debt assumptions and payments to creditors, liability assumptions in connection with a spin-off, cash distributions to parent creditors or shareholders funded by borrowing, debt-for-debt exchanges, and equity-for-debt exchanges.