Targeting Business Entity Inversions: Surrogation and Domestication

In the mid-to-late 1990s continuing through 2002, a series of transactions were consummated that, while not uniform in structure, had a common goal of permitting the parent company of a US-based enterprise to escape taxation as a US resident. A thinly veiled or even avowed goal of such transactions...

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Bibliographic Details
Published inTax Management International Journal Vol. 34; no. 1; p. 3
Main Author Blessing, Peter H
Format Trade Publication Article
LanguageEnglish
Published Washington Bloomberg BNA 14.01.2005
Subjects
American Jobs Creation Act 2004-US
Corporate taxes
Excise taxes
Fair market value
Income taxes
Initial public offerings
Internal Revenue Code
Jurisdiction
Provisions
Section 7874
Shareholder voting
Tax avoidance
United States > US
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Summary:In the mid-to-late 1990s continuing through 2002, a series of transactions were consummated that, while not uniform in structure, had a common goal of permitting the parent company of a US-based enterprise to escape taxation as a US resident. A thinly veiled or even avowed goal of such transactions was to permit the corporate group both to grow outside of the US tax net and to shift value beyond the US tax net through the migration of business assets and earnings through various intangible asset transfer mechanisms and leverage designed to strip out earnings. In order to protect the corporate income tax base, several bills were introduced in Congress with much flag-waving fanfare. In October 2004, Congress passed the American Jobs Creation Act of 2004, which added new Section 7874 to the Internal Revenue Code. This article does not revisit the battleground of the policy debate, but rather addresses certain of the technical issues raised by the provision.
ISSN:0090-4600
1544-0761