The US has “virtually unlimited power” to turn your debt into equity
The US government recently issued regulations to counter tax inversions and earnings stripping, but also appeared to claim powers to delve into your balance sheet and characterise debt as it pleases.
The US Department of Treasury and Inland Revenue Services (IRS) in early April released proposed regulations to combat companies avoiding tax by moving their headquarters abroad. However, certain clauses could grant the tax authority power to recharacterise debt instruments as equity for tax purposes, CT observed.
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