Corporate Inversions (Portfolio 6105)

Tax Management Portfolio, Corporate Inversions, No. 6105, describes the federal income tax consequences that occur when a domestic corporation or domestic partnership converts into, merges with, or becomes the subsidiary of a foreign corporation through an exchange of stock.

This Portfolio begins with a discussion of the events that led to the enactment of the current anti-inversion rules. It describes the statutory rules that apply to transactions that meet the definition of inversion transactions, and the regulatory rules that flesh out and expand those statutory rules. Although this Portfolio focuses on I.R.C. §7874, it also addresses the other statutory and regulatory rules that apply to inversion transactions and inverted companies.

This Portfolio may be cited as Harrington, 6105 T.M., Corporate Inversions.

I. Introduction II. Requirements of a Domestic Entity Acquisition III. Calculating the Percentage of “By Reason Of” Stock IV. Substantial Business Activities V. Consequences of an Inversion