IRS Notice Targets U.S. Corporate Inversions

IRS Notice 2014-52 (the "Notice") includes broad new rules designed to increase the tax cost of U.S. corporate inversions and reduce opportunities to lower global effective tax rates following an inversion. These new rules, generally effective only for transactions occurring on or after September 22, 2014, would limit so-called "cash-box" inversions, narrow opportunities to tailor the size of a U.S. corporation to fit under an exception, and preserve future U.S. taxation of existing controlled foreign corporations ("CFCs") under the U.S. target corporation (the "U.S. target").

While the new rules are summarized briefly below, they are lengthy and complex, and may apply to future transactions even in the absence of an inversion.