The IRS on September 29 issued guidance on corporate separations, incorporations, and reorganizations that undoes changes planned under the previous administration.
Part of the new guidance includes a notice to withdraw two sets of proposed regulations published on January 16, 2025. The first set of proposed regulations contained guidance regarding the nonrecognition of gain or loss in corporate separations, incorporations, and reorganizations. The second, concurrent set of proposed regulations would have updated reporting requirements for Section 355 transactions.
In withdrawing the two sets of proposed regulations, the IRS noted that it received several comments on the rules “which generally were critical.”
Additionally, the IRS on September 29 published Revenue Procedure 2025-30, superseding Revenue Procedure 2024-24, which had updated the procedure for requesting private letter rulings from the IRS regarding certain aspects of reorganizations that qualify under Section 368(a)(1)(D) by reason of Section 355 (i.e., divisive reorganizations) and stock distributions that qualify under Section 355. It similarly revoked the concurrent Notice 2024-38, which had solicited feedback on the procedures set forth in Revenue Procedure 2024-24.
In superseding and revoking the 2024 guidance, Revenue Procedure 2025-30 restates the guidance set out under the first Trump administration in Revenue Procedure 2018-53 and Revenue Procedure 2017-52.
For a discussion of the withdrawn guidance, see BDO’s Alert, Proposed Regulations Address Corporate Separations, Incorporations, and Reorganizations and Update Section 355 Reporting Requirements.
