10 Hous. Bus. & Tax L.J. 1 (2010)

handle is hein.journals/houbtalj10 and id is 1 raw text is: COPYRIGHT 0 2010 HOUSTON BUSINESS AND TAX JOURNAL. ALL RIGHTS RESERVED

ON AND OVER THE HORIZON: EMERGING
ISSUES IN U.S. TAXATION OF INVESTMENTS
William M. Funk*
I.    INTRODUCTION            .....................       .........2
II.   TAX POLICY GOALS                           ............................3
A. Long Term and Short Term Goals........................4
III.  SOVEREIGN WEALTH FUNDS AND OTHER
SOVEREIGN POOLS OF CAPITAL .................6
A. U.S. Taxation - Background......................10
B. Current U.S. Taxation of Foreign Governments,
Sovereign Wealth Funds et al.       .......    .............11
C. Sovereign Wealth Fund Investments in Practice .....14
D. Alternatives        .............................  .....14
IV.   CORPORATE RESIDENCE RULES              ...........   .....18
A. Controlled Foreign Corporations ................19
B. Passive Foreign Investment Companies            ............20
C. Anti-Inversion Regime.          ............    .............22
D. Alternate Approaches: United Kingdom            ............24
E. Alternate Approaches: The People's Republic of
China .......................................28
F. Alternate Approaches: Switzerland ......       ..............29
G. Policy Considerations          .........     .................30
V.    NOTIONAL PRINCIPAL CONTRACTS .....                  ........33
A. Background.          ............................. .....33
B. The Development of Notional Principal Contract
Law ........................................35
C. Current Notional Principal Contract Law ................36
D. Policy Considerations          .........     .................39
VI.   FINANCIAL TRANSACTIONS TAX......              ..................40
A. Background.          ............................. .....40
B. The United Kingdom       ..............................42
C. Switzerland..................................43
D. Policy Considerations          .........     .................44
* William M. Funk is the Principal of the Law Office of William M. Funk, practicing
tax law for funds, businesses, individuals, and nonprofits in New York, NY. A.B.
University of Chicago, J.D. Vanderbilt University School of Law, LL.M. in Taxation, New
York University School of Law. The author would like to thank his colleague Solomon
Steiman for his ongoing assistance in the preparation and review of this article.

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