Allocating PTEP in an I.R.C. Section 355 transaction

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In this Practical Guidance^® Practice Note from LexisNexis, Eversheds Sutherland attorneys Aaron Payne, Randy Buchanan, Megan Hall, Svetlanna Espinosa-Valdes and Teddy Smith provide a general overview of the relevant law and key considerations related to the allocation of previously taxed earnings and profits (PTEP), within the meaning of I.R.C. § 959, in an internal spin-off of a foreign corporation under I.R.C. § 355. 

In particular, this Practice Note covers:

• The basics for understanding PTEP,
• a high-level summary of certain requirements under I.R.C. § 355,
• the rules for allocating earnings and profits in a spin-off transaction,
• three potential methods to consider when determining how to allocate PTEP in spin-off transactions, and
• certain practical tax considerations to consider in selecting a method.