Jul 21, 2016
Richard Nugent comments on Robert Wellen's recent explanation of the thinking behind the new so-called hot dog stand regs addressing the active trade or business, device, and business purpose requirements for tax-free spinoffs and the new safe harbor for taxpayers seeking to unwind a recapitalization into control. Wellen is IRS associate chief counsel (corporate).
An excerpt from "Size Does Matter: Wellen Explains New Hot Dog Stand Regs." Tax Notes Today (July 21, 2016):
Richard M. Nugent of Cadwalader, Wickersham & Taft LLP explained that while the notice that foreshadowed the regs (Notice 2015-59, 2015-40 IRB 467 (Doc 2015-20740)) talked about investment assets, the proposed regs "essentially divide the world up between business assets and nonbusiness assets" where business assets aren't limited to only those assets that satisfy the five-year active conduct requirement in section 355(b)(2)(B).
Cash needed for working capital and liquid assets required to be held for regulatory purposes or because of a binding commitment or legal requirement count as business assets under the regs, Nugent explained.
Nugent said some practitioners read the current regs to indicate that a strong business purpose for a spinoff that effects a separation of the business and nonbusiness assets of a company "might be able to trump any evidence of device that would be found to exist." He asked what device violation exists "when there's a disproportionate allocation of the investment assets."
Nugent explained that the device regs generally don't affect split-offs or domestic internal spinoffs.
The Bank of England has initiated a review of its own exposure to LIBOR,
Scott Cammarn, Jonathan Watkins, Mark Chorazak, Aaron Lang
On 7 June 2019, Regulation (EU) 2019/876 (CRR II) was published in the Official Journal of the EU.