Schumer Tackles 'Earnings Stripping' In Bid To Blunt Inversions
Law360, New York (August 14, 2014, 4:37 PM EDT) -- Sen. Charles Schumer, D-New York, proposed new anti-inversion legislation on Thursday, focusing on "earnings stripping," the practice of making deductions on debt owed by the U.S. entity to its inverted parent.
Schumer's proposal would address earnings stripping by repealing a deduction limitation safe harbor for debt-to-equity deals and lowering permitted net interest expense from 50 percent to 25 percent of the subsidiary's taxable income. It would also repeal deductions that carry forward to future years and require U.S. subsidiaries to get IRS approval for 10 years after an inversion.
The senator pointed to a Barclays analysis of Walgreen Co.'s abandoned inversion...
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