anti-inversion rules Archives

By Anthony Diosdi Many foreign investors (who are not domiciled in the U.S.) are advised to hold U.S. real property through U.S. corporations which in turn are owned by foreign corporations. Foreign investors are told to use these multi-tiered corporate blocker structures to avoid the U.S. estate and gift tax. At one time, multi-tiered corporate blocker structures could protect foreign investors from U.S. federal estate and gift tax.All this was possible because prior to the 2004 calendar year, a U.S. corporation may reincorporate in a foreign jurisdiction and thereby replace the U.S. parent corporation with a foreign parent corporation. These transactions were commonly referred to as asset inversion transactions. In asset inversions, a U.S. corporation generally recognized gain (but not loss) under Section 367(a) of the Internal Revenue Code as…

By Anthony Diosdi IntroductionUnder current law, a U.S. corporation may reincorporate in a foreign jurisdiction and thereby replace the U.S. parent corporation of a multinational corporate group with a foreign parent corporation. These transactions are commonly referred to as inversion transactions. Inversion transactions may take many different forms, including stock inversions, asset inversions, and various combinations of and variations on the two. Most of the best known transactions to date have been stock inversions. In one example of a stock inversion, a U.S. corporation forms a foreign corporation, which in turn forms a domestic merger subsidiary. The domestic merger subsidiary then merges into the U.S. corporation, with the U.S. corporation surviving, now as a subsidiary of the new foreign corporation. The U.S. corporation’s shareholders receive shares of the foreign corporation…

Tag: anti-inversion rules

Why the Anti-Inversion Rules Make the Holding of U.S. Real Property through Multi-Tiered Blocker Structures Worthless to Foreign Investors

Introduction to Corporate Cross-Border Transfers, Reorganizations, and Inversions Part 3. “The Anti-Inversion Rules- It’s Not Just for Large Multinational Corporations Anymore”