MILPITAS, Calif. -- Palm, Inc. (Nasdaq: PALM) today announced that it received a ruling from the Internal Revenue Service that a proposed distribution of shares of PalmSource, Inc., Palm's majority-owned operating-system software business subsidiary, will be tax-free to Palm, Inc. and its United States shareholders for U.S. federal income tax purposes. Palm expects to distribute the shares of PalmSource, which develops and licenses the Palm operating system, to Palm, Inc. shareholders in the first half of calendar 2003, pending approval of the distribution from the Palm Board of Directors and filing of the appropriate documents with the U.S. Securities and Exchange Commission. "The IRS ruling puts us another step closer to achieving our objective of creating two independent companies, each focused on the strategies required to strengthen its respective leadership position within the mobile-computing industry," said Eric Benhamou, Palm chairman and chief executive officer. Palm Inc. PalmSource Inc.