Treasury Takes New Steps To Limit Tax Inversions

By Robert SchroederMarketWatch Pulse

The Treasury Department on Monday took new steps to crack down on inversions, deals in which a U.S. company moves its legal address abroad for tax benefits. The Treasury said it was moving to prevent foreign companies that buy multiple U.S. companies from increasing their sizes and avoiding inversion thresholds for more U.S. acquisitions. Also, the department tightened rules on "earnings stripping," in which a foreign parent company lends money to its U.S. operation, and the interest is then deducted. Treasury Secretary Jacob Lew said only legislation can stop inversions and urged Congress to take action on comprehensive business tax reform.

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