Yahoo announced on Wednesday it has decided to keep and not sell its $31 billion stake in Alibaba. Instead, the company will spin off other assets of its core businesses.

The company reported that its board of directors decided unanimously to drop its plans to spin off its holdings in Alibaba Group Holding Limited, the Chinese e-commerce company, which was first announced back in January of 2015. The reason for abandoning this pending plan was cited as concerns about potential tax risk.

"We believe that the previously announced spin off would be tax free to Yahoo and its shareholders," chairman of Yahoo's Board of Directors Maynard Webb said in a statement. "However, in consideration of developments since the original spin off plan was announced and after significant deliberations, we are suspending work on the Aabaco spin off. Among other factors, we were concerned about the market's perception of tax risk, which would have impaired the value of Aabaco stock until resolved."

Yahoo will go in the opposite direction in a reverse spin off of its core business and its approximately $9 billion stake in Yahoo Japan.

"Informed by our intimate familiarity with Yahoo's unique circumstances, the Board remains committed to accomplishing the significant business purposes and shareholder benefits that can be realized by separating the Alibaba stake from the rest of Yahoo," Wedd said. "To achieve this, we will now focus our efforts on the reverse spin-off plan."

Yahoo said its assets and liabilities other than Alibaba will be transferred to a newly formed, publicly traded company, with Yahoo shareholders getting shares in both companies.

Yahoo CEO Marissa Mayer said that separating its core Internet business for the Alibaba stake via the reverse spin "will provide more transparency into the value of Yahoo's business." It may also potentially save shareholders billions of dollars in taxes. However, the reverse spin off will probably take more than a year to be carried out.

Yahoo announced a conference call Wednesday morning to provide more information.

Source: Yahoo

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