How the Reverse Morris Trust Works in Tax-Free Spinoffs

Lucas and Luna break down the Reverse Morris Trust, a legal structure that lets companies spin off a division and merge it with another firm while deferring capital gains taxes. They walk through a concrete example: when a mid-cap industrial company wanted to offload its packaging unit in early 2026, it used an RMT to save an estimated $140 million in tax. Lucas explains the 50 percent ownership rule, the IRS continuity requirement, and why this structure is having a resurgence as companies simplify their portfolios ahead of a potential corporate tax rate change. Luna presses on the risks — what happens if the IRS challenges the tax opinion? The episode answers that with a real 2024 court case where a deal got unwound. This is nuts-and-bolts M&A engineering for operators who want to understand the legal toolkit behind the headlines. #ReverseMorrisTrust #TaxFreeSpinoff #MAEngineering #CorporateRestructuring #TaxDeferral #Section368 #Spinoff #CarveOut #IndustrialDeal #PackagingSector #IRSScruitny #TaxOpinion #BusinessPodcast #Business #MergersAndAcquisitions #FexingoBusiness #DealStructures #PortfolioSimplification Keep every episode free: buymeacoffee.com/fexingo