US Inversions: What Needs To Be Done?

On April 4, 2016, the U.S. Government blasted "inversion" transactions. We explain, what recommended action steps should be taken.

This update is provided by True Partners Consulting LLC.

On April 4, 2016, the U.S. Treasury Department and the IRS issued proposed regulations (REG-108060-15) under section 385 of the Internal Revenue Code that will impact any corporation that issues a purported debt instrument to related corporations or partnerships. Specifically, the proposed rules contain three major elements:

• They treat certain related party interests in a corporation as indebtedness in part and stock in part for federal tax purposes;
• They establish threshold documentation requirements, without which the instrument will be treated as stock for federal tax purposes; and