Today, the IRS issued proposed regulations modifying the current regulations under section 355 to provide more objective guidance on certain device and non-device factors and adding a new minimum standard for the active trade or business requirement.  The proposed regulations provide objective thresholds comparing the ratio of business and non-business assets to determine whether a distribution by a corporation is a device.  In addition, the proposed rules add a new requirement that the active trade or business must be five percent of the total fair market value of the corporation’s assets.