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SAN FRANCISCO, United States — The Internal Revenue Service declined to issue a ruling on Yahoo! Inc.'s plans to exit a stake in Alibaba Group Holding Ltd. without incurring taxes, the Web company said.
Tax authorities didn’t make a decision on whether the spinoff was taxable, Yahoo said in a regulatory filing on Tuesday.
The IRS “was not ruling adversely on the request,” Yahoo said, adding that it withdrew its request for a ruling. The company will continue to work on the spinoff plan, while conferring with legal advisers, Yahoo said.
It wasn’t clear how the development will affect Yahoo’s plans to conduct a tax-free spinoff of its shares in the Chinese e-commerce giant, a plan the Internet company unveiled in January as it seeks to maximize the return of cash to shareholders. Any obstacle to the spinoff would erode the appeal for shareholders who bought Yahoo betting they essentially would get a tax-free payout when the deal closes.
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The spinoff is a critical step for Chief Executive Officer Marissa Mayer after coming under pressure from Starboard Value LP and other investors to return cash to shareholders, find ways to cut taxes and avoid major acquisitions.
By Brian Womack; editors: Jillian Ward, Reed Stevenson.
