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The distribution of the controlled corporations' stock can be made on a pro rata or non-pro rata basis. The stock of the controlled corporations is then distributed to the transferor corporation's shareholders, and the transferor corporation is liquidated. In a split-up, assets are transferred from one corporation to two or more controlled corporations.Type D divisive reorganizations can take the form of a split- up, a split- off, or a spinoff, whereby a corporation transfers part of its assets to one or more controlled corporations, which then distribute their stock in one of the following ways: Such transactions occur because the two businesses are perceived to be worth more individually than together, or because the shareholders want to split, with some owning one business (via owning the stock of one of the corporations) and others owning another (via owning the stock of the other corporation). However, the most common uses of D reorganizations involve the splitting of one corporation into two or more corporations in transactions commonly described as split- ups, split- offs, and spinoffs. Type D reorganizations can be either acquisitive or divisive. 368(a)(1)(D), stock or securities of the corporation to which the assets are transferred must be distributed to the transferor's shareholders in a transaction that qualifies under Sec.
For divisive D reorganizations, control means ownership of at least 80% of the total voting stock and at least 80% of the total number of shares of all other classes of stock (Sec. Immediately after the transfer, the transferor corporation or its shareholders must be in control of the corporation to which the assets are transferred (Sec. A Type D reorganization involves a transfer of assets between corporations.