Submitted By: John
Answered: January 27, 2017 9:00 am

I recently received stock in a new corporation as a result of a spin-off from a public company. Am I taxed on this?

Usually, a spin-off does not result in any gain or loss to a shareholder. A portion of the basis of the old stock is allocated to the new stock in the spin-off company. The IRS usually gives a ruling to the parent company to confirm this tax treatment. Best bet: Check with the company’s office of shareholder relations, which you can usually find on the company’s website, to find out about the specifics of the spin-off that you were involved in.

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Tax Glossary

Community income

Income earned by persons domiciled in community property states and treated as belonging equally to husband and wife.

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