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3 Hous. Bus. & Tax L.J. 1 (2003)

handle is hein.journals/houbtalj3 and id is 1 raw text is: COPYRIGHT © 2003 HOUSTON BUSINESS AND TAX LAW JOURNAL. ALL RIGHTS RESERVED. CORPORATE INVERSIONS: WILL THE REPO ACT KEEP CORPORATIONS FROM MOVING TO BERMUDA? Beckett G. Cantley* TABLE OF CONTENTS I. IN TRO D U CTIO N ....................................................................... 2 II. TAX CONSEQUENCES OF A STOCK CORPORATE IN V ERSIO N .......................................................................... 3 A. What is a Stock Corporate Inversion? ......................... 3 B. Tax Consequences of Undertaking a Stock Inversion T ransaction .................................................................. 4 C. Tax Consequences After Stock Inversion T ransaction .................................................................. 6 1. Pre-Inversion Background ..................................... 6 2. Post-Inversion Subsidiary of a U.S. Corporation ...... 9 3. Post-Inversion Foreign Parent Corporation ...... 12 4. Post-Inversion U.S. Shareholders ....................... 13 5. Post-Inversion Foreign Shareholders .................. 14 III. THE DRAFT REPO ACT ................................................... 14 A. Proposed Law Changes .............................................. 14 1. Proposed Change to Pure Inversions ................... 14 2. Proposed Change to Non-Pure Inversions ........... 15 IV. WILL THE DRAFT REPO ACT DETER CORPORATIONS FROM TRANSACTIONS LIKE INVERSIONS? ........................ 21 A . D eterrence ................................................................. 21 B. Not Really Solving the Problem ............................... 22 V. THE SEPTEMBER 11, ENRON, AND BUDGET FACTORS .......... 25 V I. CONCLUSION .................................................................... 27 Beckett G. Cantley (University of California, Berkeley, B.A., 1989; Southwestern University School of Law, J.D., cum laude, 1995; and University of Florida, College of Law, L.L.M. in taxation, 1997) is a Professor of Law at St. Thomas University School of Law.

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