RSM TAX ALERT | April 06, 2016 — from IMA member RSM
The Treasury and IRS recently issued temporary and proposed regulations to address the continued erosion of the U.S. corporate tax base through inversions, specifically targeting earnings stripping transactions. While the regulations will likely slow the pace of U.S. corporations seeking inversions, Treasury Secretary Jacob J. Lew urged Congress to enact anti-inversion legislation in order to fully stop inversions. The regulations are already having a huge impact on previously announced inversions such as the Pfizer-Allergan transaction, which was scuttled following the issuance of these regulations. Broadly speaking, the regulations address two areas, as described below.