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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.

West's Encyclopedia of American Law, edition 2. Copyright 2008 The Gale Group, Inc. All rights reserved.
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The strength of the empirical material is the triangular view of the parent firms, the child firms and third parties that have been involved during the spinning off. A limitation of this study is that we have not been able to follow the practices of collaboration over time.
(2002): Spinning off New Ventures from Research Institutions Outside High Tech Entrepreneurial Areas, Tesis Doctoral, M.I.T.
The company said in October that it was considered spinning off its Lands' End and Sears Auto Center (SAC) businesses in an effort to enhance its financial flexibility.