Combatting Corporate Inversions

The Obama administration continued to take action to combat corporate inversions by issuing two sets of regulations that target inversions and earnings stripping. An inversion results in a U.S. parent corporation of a multinational group being replaced by a foreign parent corporation. The government previously issued guidance in 2014 and 2015 on inversions. At the same time, the government said that Congress needs to enact legislation as part of a more comprehensive strategy on inversions.

Inversions

Temporary regulations (TD 9761) incorporate the rules from 2014 and 2015 and also impose new limits on transactions that corporations may use to avoid existing restrictions on inversions. The regulations focus in particular on serial inverters, where companies engage in multiple acquisitions of domestic entities. The Treasury Department indicated that the regulations take away a significant amount of the tax benefits from serial inversions. The regulations also address