The planned spin-off of the Insurance Auto Auctions business from KAR Auction Services reached what KAR’s chief executive called “an important milestone” this week.
The Internal Revenue Service provided KAR a favorable private letter ruling regarding the tax-free status of the IAA spin-off, KAR said in a news release Monday.
“This favorable tax ruling is an important milestone towards completing the spin-off,” KAR chairman and CEO Jim Hallett said in the release. “We are pleased to continue moving forward with this transaction which will enhance the success of each business by creating two companies that will be leaders in their respective markets.”
There are several conditions to which the spin-off remains subject. That includes the effectiveness of IAA's Registration Statement on Form 10 filed with the U.S. Securities and Exchange Commission, as amended; the execution of ancillary agreements related to the spin-off; and final approval from the KAR board of directors.
The spin-off was first announced in February 2018.