Yahoo's planned Alibaba spinoff looks unlikely

UPDATED: Yahoo could be hanging on to its multi-billion dollar investment in Chinese tech titan Alibaba -- for better or worse.

Yahoo could be hanging on to its multi-billion dollar investment in Chinese tech titan Alibaba -- for better or worse.

The search company is not going through with its spinoff plans -- despite months in the making -- according to CNBC after the closing bell on Tuesday.

The report, based on unnamed sources, follows several days of murmurs about whether or not Yahoo would give up on the Alibaba stake spinoff or sell its core Internet business altogether.

First announced in January with the moniker SpinCo, Yahoo's millions of Alibaba shares translated to roughly $40 billion with the promise the valuation would be bumped up to $50 billion upon completion of a spinoff firm.

The Small Business department, responsible for helping SMBs get their businesses online, was folded into the spinoff plans in February.

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The Sunnyvale, Calif.-based company updated in July that the new publicly traded investment company would be known as Aabaco Holdings, Inc.

Aabaco would still have incorporated all of Yahoo Small Business as well as 15 percent (roughly 384 million shares) of Alibaba Group.

Aiming for the split to be completed by the end of the fourth quarter of 2015, Yahoo and Aabaco planned to operate independently, and neither would have had ownership interest in the other.

The spinoff was projected to be a cash windfall for Yahoo -- although it was questionable how and where the company, helmed by CEO Marissa Mayer since 2012, would have deployed its new resources.

But Yahoo hit a snag in September when the Internal Revenue Service and U.S. Department of the Treasury instilled new policies that would have seemingly affected -- and derailed -- the proposal.

Regardless, Yahoo countered in a filing with the U.S. Securities and Exchange Commission that the formal "no-rule" policy -- applying to transactions said to be similar to the one Yahoo was conducting -- established by the IRS on September 14 would not actually apply retroactively.

Thus, Yahoo's board of directors voted at the time to move ahead with the original plans.

Then just last week, Yahoo's board met to discuss whether it should sell its core business instead of its Alibaba stake. A decision was expected to fall by Friday, but the technology company has remained silent.

ZDNet has reached out to Yahoo for confirmation and further comment.

UPDATE: A Yahoo spokesperson declined to comment.