Tax-Free Spinoff

The media business seems to do these all the time.

Discovery was hooved inside of the thick walls of traditional companies, from Liberty Media managing it, to it then being distributed by the cable systems owned by Time Warner, Cox, Comcast, Cablevision, and the others. Then, when Discovery grew up (and bifurcated into The Discovery Channel and Discovery Education), the company gained essentially full independence by being spun off, tax free, in the form of a distribution of its shares of stock to its owners.

That is, if you owned 1,000 share of Time Warner (way bigger company), then, upon executing the tax free spin, you'd receive 12 shares of Discovery. Those 12 shares are not taxable to you until you then sell them for cash. Tax-free spins are not taxable because they're essentially barter deals, i.e. like-for-like exchanges.

So here's to tax-free (and here's to Shark Week!).