Guidance on Inversions Is a Priority
Kirkland partner Anthony Sexton suggests guidance for the issuance of regs or other published guidance on applying inversion rules to creditors of bankrupt and insolvent companies under reg. section 1.7874-2(i)(2) in Tax Notes International.
“…Anthony Sexton of Kirkland & Ellis LLP generally describes section 7874 and regs as an antiabuse regime. The legislative history to section 7874 and the preambles to the regs confirm that the rules were intended to prevent companies included in the U.S. tax base from relocating operations to foreign countries outside of the U.S. tax net in a non-economic way.
In Anthony’s view, treating creditors’ claims as stock of a new foreign parent in title 11 or insolvency cases is necessary for the inversion rules to be effective, but the rules may cause inappropriate outcomes when implemented.”