Sullivan & Cromwell Discusses Corporate Inversion Transactions

On January 13, 2017, the Internal Revenue Service (the “IRS”) and the Treasury Department (the “Treasury”) published new final and temporary regulations (the “New Regulations”) and issued a notice of proposed rulemaking by cross-reference to the temporary regulations that address inversion transactions.  The New Regulations generally finalize the previous temporary and proposed regulations while making a few technical changes.  Most notably, the New Regulations:

  • expand the application of the “associated obligations” rule and exclude intercompany obligations from “nonqualified property” that gives rise to disqualified stock,
  • retain the distinction between stock and asset reorganizations,
  • leave undisturbed pre-IPO buyout transactions and
  • modify

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Sullivan & Cromwell discusses New Anti-Inversion Notice

SUMMARY

On September 22, 2014, the Internal Revenue Service (the “IRS”) and the Treasury Department (the “Treasury”) issued Notice 2014-52 (the “Notice”) announcing that the Treasury and the IRS intend to issue regulations that will address inversion transactions and certain post-inversion transactions that the IRS and the Treasury characterize as tax avoidance transactions. According to the Treasury, the forthcoming regulations are intended to reduce the potential tax savings that could be extracted from inversion transactions and generally tighten the rules on cross-border mergers. The Notice is generally applicable to acquisitions completed on or after September 22, 2014 (even if completed … Read more