IR-2025-11: Treasury, IRS request comments on proposed regulations and a draft form for certain corporate separations and reorganizations

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IRS Newswire January 13, 2025

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Issue Number:    IR-2025-11

Inside 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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Tax Tip 2025-04: Access retirement funds in a disaster

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IRS Tax Tips Jan. 13, 2025

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Issue Number: Tax Tip 2025-04

Access retirement funds in a disaster

The SECURE 2.0 Act makes it easier for qualified individuals impacted by a federally declared major disaster to access their retirement savings.

Eligibility

A taxpayer may be eligible for relief that provides for expanded access to their retirement funds if their principal residence was in a major disaster area and they sustained an economic loss due to that disaster. An economic loss includes, but is not limited to:

  • Being displaced from the taxpayer’s principal residence.
  • Loss or damage to or destruction of real or personal property from fire, flooding, looting, vandalism, theft, wind, or other cause.
  • Lost income due to temporary or permanent layoff.

Use the tool on FEMA.gov/Disaster to find a current list of major disaster declarations.

Types of relief

These types of disaster relief are available to people who qualify:

  • May withdraw up to $22,000 from an IRA or other eligible retirement plan.
    • Amount exempt from the 10% early distribution tax.
    • May repay to a retirement plan or IRA within three years of the distribution.
    • Distribution may be included equally in income over three years.
  • A retirement plan may offer increased loan limits and delay repayments.

The IRS is here to help

For questions and assistance, call the IRS disaster hotline at 866-562-5227.

More information

Subscribe to IRS Tax Tips

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