Articles 1 - 1 of 1
Full-Text Articles in Law
Reconciling Business Purpose With Bail-Out Prevention: Federal Tax Policy And Corporate Divisions, Stephen B. Cohen
Georgetown Law Faculty Publications and Other Works
Corporate divisions-spin-offs, split-offs, and split-ups-unfortunately pose a more complex problem than Senator Humphrey's childlike vision would lead one to believe: the reconciliation of competing goals of maximizing business flexibility and minimizing tax avoidance. It is widely believed that divisions are essential to business planning; thus, tax-free treatment promotes business flexibility. Yet, an untaxed division may allow tax avoidance through "bail-out" of corporate earnings and profits at capital gain rates.