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Inversions Under Siege: Treasury’s Latest Countermeasures  


Author:  Philip R. Hirschfeld.


Source: Volume 29, Number 06, July/August 2016 , pp.5-16(12)




Journal of Taxation and Regulation of Financial Institutions

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Abstract: 

Over the last few years, several U.S. companies have engaged in tax-motivated inversion transactions with foreign companies that resulted in the U.S. company becoming a subsidiary of the foreign company. These inversion transactions, which have allowed for a significant reduction in U.S. taxes, have attracted attention from both Congress and the IRS. Recently, the IRS issued a broad set of regulations designed to halt inversions. These measures were very broad, attempting not only to halt the inversions or other actions now swept within that term, but also other steps taken by companies before and after an inversion to lower U.S. taxes. Investors and their advisers, as well as their lenders, need to understand the scope of what was done to insure that new funds invested in, or lent to, companies embarking on reorganizations with foreign companies do not get caught in the new rules’ web, which could adversely impact the expected return.

Keywords: inversion; multiple entity acquisition rule; multiple step acquisition rule; passive assets; pre-transaction acquisitions or dispositions; investment in U.S. proper

Affiliations:  1: Ruchelman P.L.L.C..

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