corporate inversions

corporate inversions - Corporate Inversions And Section...

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The Practical Tax Lawyer | 27 Jon Weiner This is another in a continuing series of articles written by members of the ABA Tax Section in which a member of the section teams up with a member from the section’s Young Lawyers Forum. OVER THE PAST FEW DECADES CORPORATE INVERSION has become a relatively easy yet contro- versial method of U.S. corporate tax reduction. The most recent legal response to corporate inversion is Internal Revenue Code (“Code”) section 7874. First, this article will defne and go through the provisions oF section 7874; then, it will examine its predecessors up until its passage; and fnally, the article will look at section 7874 in the broader context of tax policy. (All section references are to the Code unless otherwise indicated.) Definition AnD Provisions • Corporate in- version is defned as an international corporation rein - corporating in a different country, changing from a U.S. corporation to an offshore jurisdiction that is usually a tax haven and therefore potentially reducing tax liability. Of- ten this does not involve a move of the corporation’s ac- tual physical location or operations but merely a change on paper. Under U.S. law the status of most corporations as domestic or foreign is determined solely on the basis of where they are incorporated. It does not matter where the businesses are or where the corporations are man- Jon Weiner has an LLM in taxation from NYU and is a grad- uate of Yale University where he was a Phi Beta Kappa at Yale College and attended courses at Yale Law School. He has worked for a solo tax practitioner in New York City and for the tax counsel at Princeton University. Mr. Weiner would like to thank his mentors Alan Appel at Bryan Cave, Jeffrey Korenblatt at DLA Piper and Professor John Steines at NYU Law School. Corporate Inversions And Section 7874— Provisions, Predecessors, And Policies
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28 | The Practical Tax Lawyer Winter 2010 aged—in contrast to other countries like the UK and Barbados, which determine the corporation’s status, at least in part, based on where it is managed and controlled. Typically, an inversion has a new parent incorporated in Bermuda, and it does not matter who its shareholders are, where its business is, or even where its corporate headquarters are. An inversion can occur in one of three ways—a
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corporate inversions - Corporate Inversions And Section...

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