Companies can now split off parts of their business without triggering a tax bill

The US Treasury Department and IRS are proposing new rules for how companies can split up or reorganize without paying taxes on the transaction. This means businesses can more easily separate parts of their operations, like spinning off a subsidiary, without incurring immediate capital gains taxes for the company or its shareholders.

For decades, companies have used complex legal structures to avoid taxes when they reorganize or spin off parts of their business. These proposed rules clarify some of the most common maneuvers, making it easier and more predictable for companies to shed assets or create new entities. This could lead to more corporate restructuring, as the tax implications become clearer and less risky.