Investors & landlords

The taxable status of a spinoff is governed by Internal Revenue Code (IRC) Section 355. The majority of spinoffs are tax-free, meeting the Section 355 requirements for tax exemption are met.

The main difference between a tax-free spinoff and a taxable spinoff is that a taxable spinoff results if the spinoff is done by means of an outright sale of the subsidiary company or division of the parent company.  There are other elements of IRC Section 355 such as control, device, active trade or business, and distribution that determine if it tax free or not per IRS section 355.

1. Control requirements stipulate that the corporations must own stock possessing at least 80% of the total combined voting power of all classes of the stock of that corporation. There are different measures for determining voting control but are usually determined by the ability to elect directors.
2. Device requirements for tax-free spinoffs mean the spinoff cannot be used as a device for the sole purpose of distributions of earnings and profits. This is determined on a case-by-case basis and considers all aspects of the spinoff.
3. The active trade section requires both the pre-existing company and the newly spun-off company to qualify as what the IRS calls an "active trade or business" immediately once the deal is finalized. This also requires that both businesses are actively engaged in business.
4. The distribution requirements mean that the IRS requires the pre-existing company to distribute all stocks and securities held in the newly spun-off company in specific ways. Usually, this is for the company to distribute at least 80% of the shares to existing shareholders on a pro-rata basis. The second involves the stock options given to shareholders explained above, where they can choose either the pre-existing company or the new company to invest in.

Without knowing the specific nature of the spinoff, it is difficult to tell if your spin off is a taxable event or not. The answer may lie within your prospectus. 

The difference between a 1099B and 1099 DIV is that 1099 B reports the sale or distributions of stocks, bonds, and other investments.  1099 DIV report the distribution of dividends. 

If you are really unsure if this should be reported or not, I would seek advice from a CPA. Hopefully i have given you some information to think about but we cannot comment on the specific nature of your event. We can only speculate based on Internal Revenue Code (IRC) Section 355 and how it may apply to you.

@Muse9876