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IRS Denies Yahoo Request for Tax Ruling on Alibaba Share Spinoff

The Internal Revenue Service denied Yahoo’s request for a letter ruling that the company’s spinoff of its shares in Alibaba would be tax-free, potentially striking a blow to a key component of the company’s strategy.

But Yahoo, in a Securities and Exchange Commission filing, also said the IRS had not explicitly said the proposed spinoff was taxable, leaving some hope a deal could still be done.

Yahoo shares fell about 4 percent in after-hours trading.

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