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News EssentialsThe Newsroom TopicsIRS Resources |
Issue Number: IR-2025-11Inside This Issue
Treasury, IRS request comments on proposed regulations and a draft form for certain corporate separations and reorganizations WASHINGTON – The Department of the Treasury and the Internal Revenue Service today issued proposed regulations for corporate separations and reorganizations, including reporting requirements for multi-year corporate separations. In connection with this proposed guidance, the IRS has posted to IRS.gov a draft version of new Form 7216, Multi-Year Transaction Reporting. These proposed regulations provide comprehensive, authoritative guidance with respect to core provisions of the Internal Revenue Code addressing corporate mergers and acquisitions transactions, and the new form will provide the IRS with necessary information with respect to corporate separations. Treasury and IRS have proposed this guidance to improve the IRS’s ability to administer the rules in the tax law governing the distribution of stock and securities of a controlled corporation, and to ensure that corporate separations satisfy the requirements to qualify for tax-free treatment. The proposed reporting regulations require certain filers to attach the new Form 7216 to their federal income tax return to provide data to the IRS regarding their multi-year corporation separation. Generally, filers would include the distributing corporation, the controlled corporation and certain significant shareholders or security holders of the distributing corporation. Importantly, the increased reporting requirements under the proposed reporting guidance would enable Treasury and the IRS to provide increased transactional flexibility through the proposed regulations. Examples of this increased transactional flexibility include addressing retentions of controlled corporation stock, monetization transactions and several other significant issues that arise from multi-year transactions. The IRS intends to follow these proposed regulations when it issues private letter rulings about certain corporate separations. The IRS plans to issue an update to Rev. Proc. 2024-24 to incorporate these proposed regulations into the procedures for requesting such private letter rulings. Treasury and IRS invite comments on both the proposed regulations and the new form. Commentors are encouraged to use the Federal e-Rulemaking portal to submit comments on both the proposed substantive regulations (users should indicate “IRS” and “REG-112261-24”) and the proposed reporting regulations and related form (users should indicate “IRS” and “REG-116085-23”). However, comments may also be mailed to: CC:PA:01:PR, Room 5203, Internal Revenue Service, P.O. Box 7604, Ben Franklin Station, Washington, DC 20044. Comments are due by March 17, 2025. Interested parties can also use the portal and the address above to provide comments regarding the draft of Form 7216.
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