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The situation that arises when a parent corporation organizes a subsidiary corporation, to which it transfers a portion of its assets in exchange for all of the subsidiary's capital stock, which is subsequently transferred to the parent corporation's shareholders.

When a spin-off occurs, the shareholders of the parent corporation are not required to surrender any of their parent corporation stock in exchange for the subsidiary's stock.

In the event that the distribution of stock to the parent corporation's shareholders amounts to a dividend, the distribution can be taxed pursuant to provisions of Income Tax statutes.

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References in periodicals archive ?
for the purpose of spinning off to its shareholders, pro rata, all of its interest in that subsidiary and its associated operations.
NYSE:AGN) today announced that its board of directors has approved the separation of its pharmaceutical and optical medical device businesses into two independent companies by spinning off the ophthalmic surgical and contact lens care businesses -- the "optical medical device business" -- to its stockholders by means of a tax-free dividend.
My nominees, if elected, are committed to spinning off Nabisco.