Extract to table

Both the Distributing corporation (Veldran) and the Controlled corporation (Meridian) must be engaged in the active conduct of a trade or business immediately after the distribution, and such trade or business must have been actively conducted throughout the five-year period ending on the date of the distribution

Under Section 355(b) of the Code, both the Distributing corporation (Veldran, directly or through its retained business) and the Controlled corporation (Meridian) must be engaged in the active conduct of a trade or business immediately after the distribution

In addition, each such trade or business must have been actively conducted throughout the five-year period ending on the date of the distribution

However, this factual assertion must be thoroughly documented and verified

Section 355(e) of the Code — the so-called "anti-Morris Trust" provision — provides that if a distribution otherwise qualifying under Section 355 is part of a "plan (or series of related transactions)" pursuant to which one or more persons acquire, directly or indirectly, stock representing a 50-percent-or-greater interest (by vote or value) in either the Distributing corporation or the Controlled corporation, then the Distributing corporation must recognize gain on the distribution as though it had sold the Controlled stock at fair market value

Calderwood & Harkness must ensure that the business purposes articulated for the spin-off are genuine corporate-level purposes of Veldran Industries Holdings, Inc