spin-off (also spin·off) • n. a byproduct or incidental result of a larger project: the commercial spin-off from defense research. ∎  a product marketed by its association with a popular television program, movie, personality, etc.: [as adj.] spin-off merchandising. ∎  a business or organization developed out of or by members of another organization, in particular a subsidiary of a parent company that has been sold off, creating a new company.

SPIN-OFF

The situation that arises when a parent corporation organizes a subsidiary corporation, to which it transfers a portion of its assets in exchange for all of the subsidiary's capital stock, which is subsequently transferred to the parent corporation's shareholders.

When a spin-off occurs, the shareholders of the parent corporation are not required to surrender any of their parent corporation stock in exchange for the subsidiary's stock.

In the event that the distribution of stock to the parent corporation's shareholders amounts to a dividend, the distribution can be taxed pursuant to provisions of income tax statutes.