IRS rejects Yahoo’s tax-totally free spinoff. Stock tanks

Who is Jack Ma? Yahoo’s spinoff of its huge stake in Alibaba just acquired dealt a blow by the govt.

Yahoo ( YHOO , Tech30 ) had been hoping the IRS would bless the spinoff as a tax-totally free transaction, saving traders massive sums of cash.

Yahoo owns about 384 million shares of Alibaba ( BABA , Tech30 ) , value about $ 23 billion. The spinoff is the centerpiece of CEO Marissa Mayer’s strategies to return money to shareholders.

Even so, Yahoo instructed traders in a filing Tuesday that the IRS has rejected its ask for for a specific tax ruling on the offer.

It phone calls into query the prospect of the transaction going ahead as presently envisioned.

Regardless of the rejection, Yahoo said in the submitting that it will proceed to operate on the spinoff.

Shares of Yahoo fell 4% in right after-hours trading following the news.

The IRS notified Yahoo on September 2 that would not grant the company’s asked for ruling. Two times afterwards Yahoo disclosed to shareholders the departure of Aman Kothari, its chief accounting officer.

Yahoo explained a single option is to go forward with the deal on the basis of an opinion from its legal professionals that the transaction will fulfill requirements for tax-totally free therapy.

Yahoo also stated that even though the IRS experienced turned down a special tax ruling, it hadn’t explicitly mentioned the offer was taxable either.

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