Friday, July 17, 2020
Charlene D. Luke (Florida), Continuity as the Key to Reform of Section 355, 69 Am. U. L. Rev. F. 39 (2019):
There can be little doubt that Internal Revenue Code (Code) section 355 is overly complex; the piecemeal adjustments spanning multiple decades could serve as exemplars of the potential pitfalls of incremental reform. Revisions to section 355 have tended to be under- or over-inclusive because they are reactive to particular deals, yet they leave largely intact older structures that dealt with different deals. The result is a jumble of provisions that fail to implement a coherent, principled approach to the tax treatment of corporate divisions. In Reform of Section 355, Bret Wells urges changing Code section 355 to focus on the continuity of historic shareholders and historic assets [Reform of Section 355, 68 Am. U. L. Rev. 447 (2018)]. The proposals Wells suggests are grounded in congressional intent, specifically the rise and fall of the General Utilities doctrine and its role in the taxation of corporate divisions.
This Response to Reform of Section 355 explores the continuity concept and considers the extent to which, if there were conflicting readings of congressional intent or changes to congressional intent, the use of the continuity concept to guide section 355 reform would remain a principled choice.