Split-off

Split-off means:
either of two types of tax-free corporate reorganizations instrument or action:

1. Under a Type No. 1 exchange, a corporation transfers part of its assets to a new corpo-ration in exchange for stock of the new corporation. The original corporation then distributes the same stock to its shareholders, who in turn surrender part of their stock in the original corporation.

2. A Type No. 2 contraction occurs when a parent company transfers stock of a controlled corporation to its stockholders in redemption of a similar portion of their stock. The term controlled refers to the ownership of 80% or more of the corporation whose shares are being distributed. Former IRC (check if this IRC provision is current here) §355.

Therefore, is a type of corporate reorganization instrument by which the shares of a new corporation (or the subsidiary company) are distributed to the original shareholders (or the parent's shareholders) with these shareholders surrendering part of their stock in the original (or parent) corporation.