Stapled Stock and Decontrol of Foreign Corporations: Another Loophole Closing?
The United States Internal Revenue Service (IRS) may succeed in limiting tax abuse in the areas of stapled stock and control of foreign corporations. A review of United States parent corporations' efforts to decontrol controlled foreign corporations to avoid taxes of foreign earned profits focuses on the following: the history of Subpart F of the Internal Revenue Code of 1954 and its amendments, how the IRS delineates 'control', how stapled stock techniques are used, and current applications. Legislative change may soon be enacted to aid the IRS in its investigation of stapled stock situations and foreign taxation. Decontrol of a controlled foreign corporation that actually permits a United States shareholder to retain control should be prevented. Pending legislation will probably not completely close this tax loophole.
Publication Name: Taxes: The Tax Magazine
Foreign currency straddles: bifurcation of foreign currency gain or loss from economic gain or loss
The IRC Section 988 regulations do not imply whether hedging transactions subject to the straddle rules of Section 1092 should employ bifurcation of security gain or loss from currency gain or loss. The economics of foreign currency straddles related to investments fits well with the bifurcation approach. The bifurcation approach also is in line with the Congressional objectives behind Section 1092. Specific guidance on this issue is needed from the IRS.
Publication Name: Journal of Taxation of Investments
The quicksand of foreign investment
Foreign investors do not have explicit legal constraints to prevent them from closing operations in any country, but unofficial mechanisms exist and legal constraints are developing. A survey of treaties, international law and national law shows no prevailing restrictions. Promissory estoppel and contract law are more fruitful areas for constraints to emerge. While the United States now has a notification law, a law forbidding closures is unlikely.
Publication Name: Labor Law Journal
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