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.
28 Stan. L. Rev. 1077-1106
Scholarly Commons Citation
Cohen, Stephen B., "Reconciling Business Purpose with Bail-out Prevention: Federal Tax Policy and Corporate Divisions" (1976). Georgetown Law Faculty Publications and Other Works. Paper 1704.