Vanderbilt Law Review

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In order to delineate the problems inherent in the active business rule, this Note first will examine the legislative history of tax-free separations, isolating the primary purpose and policy of section 355. Regulatory and judicial interpretations of section 355 will also be analyzed to determine their propriety in light of the statute's purpose and to illustrate the confusion that exists in the area. This, in turn, will lead to a suggested approach for dealing with section 355 transactions in the future.