The IRS is withdrawing parts of REG-163314-03 under Sections 351 and 368 that would have affected corporations and their shareholders by requiring “an exchange or distribution of net value for certain corporate formations or reorganizations to qualify for nonrecognition treatment.” The portions being withdrawn “addressed the treatment of certain distributions not qualifying for tax-free treatment under section 332,” the IRS announced. Parts of REG-163314-03 have already been established as final.
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