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Spin-off
A distribution by a corporation of stock or securities in another corporation controlled by it (through at least 80 percent stock ownership) without the surrender of any shares by the shareholders. It is a type of corporate separation. The distribution need not be in reorganization. However, the law contains definite rules requiring that the controlled corporation must have been actively engaged in a trade or business and must continue to be so engaged after the distribution. Furthermore, the trade or business must have been conducted (but not necessarily by the controlled corporation) for at least five years prior to the distribution. The distribution will not be taxable to the shareholders if the distributing corporation distributes at least 80 percent of the outstanding stock of the controlled corporation.