The US Treasury: Downers for Inversions and Spinversions

The US Treasury department will no longer allow corporations to play hopscotch, time to leave it on the playground. Jeffrey S. Freeman, J.D., LL.M The recent announcement from the US Treasury Department and IRS are leaving corporations with some tricky decisions. Those contemplating acquisitions must now play by the new rules that went into effect immediately, except for deals being performed on the day of the announcement, September 22, 2014. New Corporate Playground Rules Strategic moves that were once legal are now being outlawed and some are complete game changers. No Hopscotch Allowed: Hopscotch was a term used to refer to corporations using a loan to avoid paying taxes. Inverted companies would avoid paying taxes on dividends by loaning to a foreign parent instead of the actual U.S. parent that was the intended recipient of the funds. Now such a loan would be taxable, thus making them unattractive and hence gone. This has major impact on eight U.S. companies with pending inversions. After Medtronic's purchase of Covidien (one of the largest deals in U.S. history) it is loaning untaxed profits outside the U.S. to its new Irish parent company. Under the new rules this transaction would be taxable. Spinning doesn't [...]