A divisive reorganization involves the transfer of all or part of a division, subsidiary, or corporate segment in a tax-free manner. It includes three main types: split-up, split-off, and spin-off.
A split-up is a form of reorganization by which a corporation divides into two or more smaller corporations. The stock of the new corporations is distributed tax-free to the shareholders of the original corporation, who surrender their stock in the old corporation.
