Saturday, July 23, 2016

Applicable Federal Rates - August 2016



Tuesday, July 19, 2016

Save the Date – September 28, 2016!

If you are in South Florida, and are interested hearing Jonathan Blattmachr present at the 3rd annual Palm Beach County Wealth & Estate Planning Seminar, click here to learn more and register (scroll down to the bottom of the list on that page for “Individual” sign ups). Space is limited, so don’t delay!

Jonathan will be speaking on two topics - The Critical Importance of Significant Tax Free Returns and How to Achieve Them, and The New Regulations Under Section 2704(b). If those new regulations are not released by then, the alternate topic will be The Charitable Deduction for Estates and Trusts–Something You Need to Know Cold. The presentation is given at the Boca Raton campus of Florida Atlantic University in the late afternoon, and is followed by a cocktail reception.

It is not too late to sign up as a sponsor either – so if you would like to get your name or your business name placed prominently before 250 or so of the best and brightest attorneys, accountants, financial advisers, insurance agents, and others in the South Florida estate planning community, click here for what you received with each level of sponsorship, click here to sign up to be a sponsor, or send me an email at and I can help and answer any questions. Again, the sooner you sign up, the quicker we can get you added to the list of sponsors on the event website and on event mailings.

I hope to see many of you there on September 28!


Monday, July 18, 2016

Safe Harbor Acquisition of Control for Spin-Offs

Code Section 355, and related Code provisions, when applicable, will allow a corporation to spin-off or split-off a subsidiary corporation to its shareholders without triggering gain to the corporation or its stockholders. One of the requirements for this treatment is that the distributing corporation “control” the distributed corporation (i.e., own 80% or more of the voting power and number of shares of the distributed corporation) immediately before distributing it to its shareholders.

To come under Section 355, the distributing corporation may intentionally acquire control before the spin-off or split-off, and then transactions are undertaken after the distribution that reverse in whole or in part such acquired control as to the shareholders that succeed to ownership of the distributed corporation. Determining whether the IRS will respect such acquisition and subsequent disposition of control and the application of Section 355 can be difficult to determine.

The IRS has now issued a Revenue Procedure describing some safe harbor circumstances when such an acquisition and divestiture of control will not be the basis of a challenge by the IRS to Section 355 applying.

Generally, under the safe harbor, if the distributing corporation is issued shares of the distributed corporation to give the distributing corporation control, and if no action is taken to unwind the acquired control within the first 24 months after the distribution, then the IRS will allow Section 355 treatment. If the unwind occurs via an unanticipated third party transaction with other persons, such as a merger, the safe harbor applies if there is no agreement, negotiations or discussions within the first 24 month period (even if the transaction itself occurs within that 24 month period), and there is not more than a 20% overlap of ownership between the other person in the transaction (e.g., the other corporation in the merger) and the distributed corporation.

Rev.Proc. 2016-40