The new guidance is significant given the popularity of debt exchanges as a monetization technique in conjunction with spin-offs.

On October 3, 2018, the Internal Revenue Service (IRS) published Revenue Procedure 2018-53, which, among other things, sets forth requirements to request a private letter ruling regarding certain tax-free spin-off transactions in which the distributing corporation (Parent) uses stock or securities of the controlled corporation (SpinCo) to repay Parent debt, in the form of stock-for-debt or debt-for-debt exchanges.