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The IRS's fight against hybrid financing instruments is an issue US tax directors cannot afford to ignore.
Tax-minimising opportunities arise for multinationals when financing cross-border transactions because treatment of hybrid debt-equity instruments across jurisdictions is not uniform. And the US Tax Court has shown in recent rulings that tax planning, to benefit from such opportunities, is perfectly acceptable.
But the IRS does not like it and is increasingly challenging multinationals on the issue. This report analyses the Hewlett Packard, Scottish Power and PepsiCo debt-equity cases, pulling out the practical lessons for taxpayers considering putting debt-equity structures in place.
It also examines how to defend a debt-equity position against an IRS challenge, with exclusive insight from the taxpayer and adviser team involved in guiding Scottish Power to its hard-fought Tax Court victory over the IRS.
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Contents
How to deal with debt-equity in the US |
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Has PepsiCo's US Tax Court win revealed "super factor" in deciding debt vs equity cases? |
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How Scottish Power's US Tax Court victory could hamper IRS |
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Hewlett-Packard's court defeat is bad news for US banks |
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Further reading on ITRPremium's Tax Disputes section
UK taxpayers say US IRS is way behind HMRC in handling debt-equity cases
Former IRS chief counsel tells taxpayers what to expect in tax litigation
Amazon's US transfer pricing challenge could end IRS's aggressive intangibles approach
Eaton's US Tax Court case could define obligations of parties to an APA
US Court of Appeals Aloe Vera case raises information exchange fears
US Supreme Court to address creditability of UK windfall tax
What Union Carbide tells us about qualifying supplies in R&D
What the UBS whistleblower payout means for corporate taxpayers
US Federal Circuit decision in Dominion Resources invalidates IRS regulations
How US multinationals can prepare their French subsidiaries for tax raids
