Ya-who?

20 May 2015 By Richard Beales Follow @richardbeales1

Worries that the IRS may block the company’s mooted spinoff of a $34 bln stake in Alibaba sent Yahoo shares tumbling. The reaction suggests the U.S. internet grab-bag is still largely defined by the Chinese e-commerce giant, not what CEO Marissa Mayer is trying to build.

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Yahoo shares fell sharply near the end of the New York trading day on May 19, closing down 7.6 percent at $40.98 apiece.

The drop followed concern that a change in U.S. tax regulations could complicate Yahoo’s plan for a tax-free spinoff of its 15 percent stake in Chinese e-commerce giant Alibaba.

The Internal Revenue Service is considering a change to its rules on spinoffs and may suspend new requests, according to a statement from the agency. It said an official described the agency’s process at a legal conference on May 19.

Yahoo said that it understood the IRS statement was not specific to the company’s planned Alibaba spinoff. Yahoo, which filed its pending ruling request with the IRS in the first quarter of this year, said the IRS statement reflected no change in applicable law and did not affect previously filed ruling requests.

“Yahoo continues to work toward completing the planned spin-off in Q4 2015,” the company’s spokesperson said in a statement.

In pre-market trading on May 20, Yahoo shares had recovered somewhat to trade above $42.

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