M & A Law Prof Blog

Editor: Brian JM Quinn
Boston College Law School

Friday, August 1, 2014

Inversions may lead to more taxes for shareholders

The WSJ points out the untidy fact that although corporate inversions may have the effect of permitting firms to elect to move to lower tax jurisdictions, they do so through taxable transactions for stockholders of the US firm seeking to expatriate.  Remember, the US firm in these deals is theoretically the seller.  And, because the consideration used in these transactions is stock rather than cash, stockholders  will have to come up with cash to pay the tax necessary to do the deal. Ugh.

Over the past couple of days, I've heard a couple of narratives about why inversions are now all the rage.  In honesty, the one that rings most true is the one about the bankers pitching the next big thing...



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