State Tax Notes Article Explores State and Local Aspects of Corporate Spinoffs

FALLS CHURCH, Va., Feb. 27, 2012 /PRNewswire-USNewswire/ -- Corporations that are considering spinning off one or more of their businesses would be well advised to survey the laws of all states in order to assess the state tax implications, a leading state tax attorney writes in this week's State Tax Notes.

"A spinoff that meets the federal requirements for tax-free treatment will generally be treated as tax free for state purposes as well," writes Peter L. Faber, a partner with McDermott, Will & Emery LLP. "There are some areas of nonconformity, however, and although it can be time consuming, a survey of the laws of all the states is often in order for businesses considering spinoffs."

In his piece, "State and Local Tax Aspects Of Corporate Spinoffs," Faber explains, "[I]n a state that does not base its definition of taxable income on federal taxable income, the risk that a spinoff may be taxable may be …serious.

In California, for instance, "each corporation must be engaged in an ATOB [active trade or business] for a spinoff to be tax free … even though that is not required for the spinoff to be tax free for federal tax purposes."

State Tax Notes is published by the non-profit Tax Analysts.

To read Faber's article and to learn more about Tax Analysts, visit the Tax Analysts website at www.taxanalysts.com.

About Tax Analysts:
Tax Analysts is an influential provider of tax news and analysis for the global community.  More than 150,000 tax professionals in law and accounting firms, corporations, and government agencies rely on Tax Analysts' federal, state, and international content daily.  Key products include Tax Notes, Tax Notes Today, State Tax Notes, State Tax Today, and Worldwide Tax Daily. Tax Analysts' daily blog, Tax.com, was recently chosen by LexisNexis as the Top Tax Law Blog of 2011.  Founded in 1970 as a nonprofit organization, Tax Analysts has the industry's largest tax-dedicated correspondent staff with more than 250 domestic and international correspondents.

CONTACT:
Wendy Harris, 703 533-4404
[email protected]

Lawrence Haas, 202 257-9592
[email protected]

SOURCE Tax Analysts

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