Sen. Carl Levin, D-Mich., and Rep. Sander M. Levin, D-Mich.,
Ways and Means ranking minority member, have introduced legislation
that would strengthen anti-inversion rules under Section 7874 by
making it more difficult for U.S. companies to escape treatment as
domestic entities after merging with a foreign company.
Section 7874, enacted in 2004, generally requires U.S.
corporations to continue to be treated as domestic U.S. entities
after a merger with a foreign corporation if more than 80% of the
stock in the new entity is held by the shareholders of the original
U.S. corporation. The Stop Corporate Inversions Act of 2014 would
lower that threshold to 50%, so that any U.S. corporation merging
with a foreign corporation could be treated as foreign only if more
than 50% of the stock in the new corporation is actually held by
the shareholders from the foreign corporation.
