In the 1990s, the financial press has frequently announced corporate spin‐offs and split‐offs. Financial accounting textbooks, though, contain little or no coverage of spin‐offs, split‐offs and other types of divestitures. This paper discusses the reasons for divestitures, identifies four types of divestitures, describes the characteristics and common conditions associated with each type, reviews the accounting standards and federal income tax rules and regulations pertaining to each type, illustrates the application of the accounting standards for each type and discusses the potential impact of these accounting standards and tax rules and regulations on a corporation's choice of one type of divestiture over another. As such, this paper may be used as a supplement in an upper‐division financial accounting course.

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