However, Yahoo said the IRS had not concluded the transaction would be taxable. The company said it would weigh its options, including proceeding with the spinoff.
These additional tax related to the transaction would put even more pressure on Yahoo CEO Marissa Mayer, whose turnaround efforts have had little effect on the firm's growth.
Yahoo has been struggling to revive its core online advertising business by spending more to get users on its websites. A
Yahoo plans to spin off its stake in Alibaba into a public company along with Yahoo Small Business, which provides domain names and local marketing.