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New IRS Rules Regarding Corporate Inversions

November 21, 2014

The IRS attempts to curb the use of corporate inversion used by U.S. corporations and institutes a number of new provisions and regulations.

U.S. corporations have availed themselves of something called “corporate inversions” in recent years, which is the process by which they change their country of residence (typically through becoming a subsidiary of a foreign parent corporation) in order to face lower tax rates and avoid U.S. tax on foreign source income altogether. As a reaction to this, the IRS has issued regulations and a series of measures to discourage this unearned tax break.

The new regulations will…

  • Tighten ownership requirements
  • Limit access to earnings by preventing
    • Hopscotch loans
    • Decontrolling
    • Tax-free repatriations

For more information, read our article, “IRS makes move against corporate inversions”.

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