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International Transactions in M&A

Synopsis A presentation of the various tax implications of international M & A transactions, including foreign acquisitions of U.S. companies, U.S. purchases and sales of foreign corporations, income tax treaties, and the new U.S.–Canada Protocol.

Outline

I. Introduction
II. Foreign Acquisitions of U.S. Companies
        A. § 367 Regulations
        B. I.R.S. Code § 7874
        C. § 7874 (continued)
        D. Extension to Partnerships
        E. § 367 Regs and § 7874 (concluded)
III. Constraints on Leverage
        A. Constraints on Leverage
        B. U.S.–Canadian Financings
        C. Tower Structure
IV. Taxable Sale of a Foreign Corporation by a U.S. Seller
        A. U.S. Seller’s Considerations
        B. U.S. Seller‘s Considerations (continued)
        C. U.S. Seller‘s Considerations (concluded)
V. Taxable Purchase of a Foreign Corporation by a U.S. Purchaser
        A. U.S. Purchaser’s Considerations
        B. U.S. Purchaser’s Considerations (continued)
VI. Guidance under § 367
        A. Guidance under § 367
        B. Discussion
        C. Coming Attractions from the I.R.S.
VII. Income Tax Treaties
VIII. A Recent Canadian Case
IX. The U.S.–Canada Protocol
        A. The U.S.–Canada Protocol
        B. The U.S.–Canada Protocol (continued)
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The Penn State Dickinson School of Law

Founded in 1834 by Judge John Reed, The Dickinson School of Law is the oldest law school in Pennsylvania and the fifth oldest in the nation. Throughout its history, the law school has trained distinguished graduates who have gone on to become leaders of the bar, of the judiciary, of government, and of business. These alumni include the first secretary of the U.S. Department of Homeland Security, five governors, three U.S. senators, and more than 100 federal, state and county judges and countless prominent lawyers and civic leaders. In 2000, the law school merged with Penn State, one of the country’s premier research universities, and stepped into a new era of legal excellence.

Penn State Dickinson School of Law Center for the Study of Mergers and Acquisitions

The center, headed by Samuel C. Thompson Jr., former director of the UCLA Center for the Study of Mergers and Acquisitions, examines corporate, securities, tax, antitrust, and other legal and economic issues that arise in mergers and acquisitions. An important part of the center’s mission is to sponsor continuing legal education programs addressing these issues.

The Association of the Bar of the City of New York

The years following the Civil War were tumultuous ones for New York City, offering many opportunities to the dishonest. Unsavory politicians and errant members of the bench and bar were among those who took advantage of those troubled times. In December 1869, a letter was circulated among some of the city’s lawyers addressing those improprieties. It called for the creation of a new bar association to “sustain the profession in its proper position in the community, and thereby enable it ... to promote the interests of the public ....” More than 200 lawyers responded by signing a declaration of organization and in 1870 The Association of the Bar of the City of New York was born. The young organization quickly made its presence felt. Among its first activities was a campaign to defeat corrupt politicians and judges at the polls and to establish standards of conduct for those in the legal profession.

The association continues to work at political, legal and social reform, and maintaining high ethical standards for the legal profession. The association also continues to implement innovative means by which the disadvantaged may be helped. Much of this work is accomplished through the Association's more than 160 committees, each charged to consider a specific area of law or the profession.

The association has grown to more than 23,000 members. To serve them, the association strives to move ahead in many areas. The library is the largest member-funded law library in the country, and provides members with a “gateway” to online services, including free use of LexisNexis and WestLaw, while continuing to provide more traditional library services. The Small Law Firm Center, Career Management Program and other benefits are constantly evolving to serve members’ needs. More than 150 continuing legal education programs are presented annually.

The public good remains one of the association’s highest priorities. The Legal Referral Service, jointly sponsored by the association and the New York County Lawyers’ Association, provides an array of services directly aimed at serving the needs of the public. The City Bar Justice Center identifies the most pressing legal concerns of New York’s neediest and uses novel approaches to address them, often involving community participation.

 



Speakers / Authors:

Photo of David L. Forst

David Forst
Fenwick & West LLP

Emphasis

International Corporate and Partnership Taxation

Profile

David L. Forst is the Practice Group Leader of the Tax Group of Fenwick & West LLP. He is included in Euromoney's the Guide to the World's Leading Tax Advisors and was named one of the top tax advisors in the Western U.S. by the International Tax Review.

Mr. Forst's practice focuses on international corporate and partnership taxation. He teaches International Taxation at Stanford Law School and is an editor of and regular contributor to the Journal of Taxation, having published articles on, among other topics, international joint ventures, international tax aspects of mergers and acquisitions, and the proposed dual consolidated loss and section 987 currency regulations. He has chaired and spoken at numerous tax seminars, including the NYU Tax Institute, various TEI meetings, and the San Jose State Tax Institute.

Education

Stanford Law School, J.D., with distinction, 1992
Princeton University, Woodrow Wilson School of Public and International Affairs, A.B., cum laude, Phi Beta Kappa, 1989

Admitted to Practice

Member of the State Bar of California.

Photo of Jeffrey C. Trossman

Jeffrey Trossman
Blake, Cassels & Graydon LLP

Jeffrey Trossman is a Partner in the Blakes Tax Group. His practice focuses on all aspects of income tax planning, including mergers and acquisitions, corporate reorganizations, corporate financing transactions, private equity, international taxation and the taxation of income trusts, mutual funds and other investment vehicles.

Jeffrey has acted for a wide variety of public and private companies. He also has experience representing taxpayers at all levels in the tax appeal process under federal and provincial taxation statutes.

Jeffrey has written and spoken widely in the tax area. He has authored articles published by the Canadian Tax Foundation, Osgoode Hall Law School and in the International Tax Review. He is an active member of the International Fiscal Association and the Canadian Tax Foundation. He is a member of the faculty for the 2007 and 2008 Institutes on Tax Aspects of Mergers & Acquisitions and is also a country reporter for Canada at the 2008 Congress of the International Fiscal Association to be held in Brussels. He is also a member of the Committee on Taxation of Business Entities of the New York City Bar.

Jeffrey has been recognized as a leading tax practitioner in Legal Media Group’s Guide to the World's Leading Tax Advisers 2007, PLC Cross-border Tax on Corporate Transactions Handbook 2007, Chambers Global: The World’s Leading Lawyers for Business 2008 and The Canadian Legal Lexpert Directory 2008.

Photo of Peter H. Blessing

Peter Blessing
Shearman & Sterling LLP

Practice

Mr. Blessing’s practice focuses on tax aspects of (i) mergers and acquisitions, spin-offs, restructurings, and joint ventures, (ii) investment funds and REITs, (iii) financings and derivatives and (iv) transfer pricing and global tax minimization strategies. In addition to his tax planning practice, Mr. Blessing represents clients on ruling matters and in tax controversies. Mr. Blessing became a partner of the firm in 1986.

Recent Experience

Representative Clients:
Merrill Lynch, The Thomson Corporation, Eaton Vance, Daimler, Barclays, Morgan Stanley, CIT, Lehman, Deutsche Bank, Vivendi, ABB, Lazard, Husky Energy, Citigroup and Caxton

Representative Transactions:
Daimler in its disposition of Chrysler (2007), Saudi Basic Industries in its acquisition of GE’s Plastics Division (2007), Citigroup in its acquisition of the Old Lane Hedge Fund (2007), Thomson in the sales of its Learning Unit (2007) and Net G subsidiary (2007) and combination with Reuters (2007-2008) and Tata in the sale of its 30% interest in Glaceau to Coca-Cola (2007)

Selected Professional & Business Activities

  • Fellow of the American College of Tax Counsel; Secretary of the New York State Bar Association Tax Section and member of its Executive Committee; Executive Committee member of the USA Branch of the International Fiscal Association; Council member of the American Bar Association Tax Section (liaison for Affiliated Taxpayers and Corporate Committees) and member, Committee on Foreign Activities of US Taxpayers (chair, 2004-2006) and Committee on Government Submissions; Vice Chair–Programs, Taxation Committee of the International Bar Association; Adjunct Professor, Columbia Law School (JD program); Board member, International Tax Institute, Inc. (president, 2003-2005); member, Tax Forum; member, International Tax Group; and Board member, BNA Tax Management Advisory Board
  • Frequent lecturer on various aspects of taxation and cross-border taxation at seminars sponsored by IFA, IBA, ABA, NYSBA and various commercial organizations

    Publications

    Authored a treatise, Income Tax Treaties of the United States (Warren Gorham & Lamont), and two volumes in the BNA Tax Management Portfolio series: The Branch Profits Tax (co-author) and Source of Income. Numerous articles published in various professional journals

    Education

    New York University School of Law, LL.M. in Taxation, 1981
    Columbia University School of Law, J.D., 1977
    Princeton University, B.A., 1973

    Bar Admissions/Qualifications

    New York

    Photo of Steven A. Musher

    Steven Musher
    Internal Revenue Service

    Mr. Musher is the Associate Chief Counsel (International), in the office of the Chief Counsel of the U.S. Internal Revenue Service. Mr. Musher joined the IRS in 1994. Previously he worked 16 years as an international tax specialist in the private sector. His prior affiliations were with the law firms of Cole Corette & Abrutyn, a professional corporation (of which he was a Member) and Arnold & Porter. Mr. Musher has his B.A. magna cum laude from Yale University, his J.D. from the University of Pennsylvania Law School (Order of the Coif), and his L.L.M. from Georgetown University Law School.

    Photo of Willard B. Taylor

    Willard Taylor
    Sullivan & Cromwell LLP

    Practices

    • Tax
    • Commodities, Futures and Derivatives
    • Financial Institutions
    • Investment Management
    • Private Equity
    • Project Development and Finance
    • Structured Finance

    Willard Taylor has been Of Counsel at Sullivan & Cromwell since January 2008. He was a partner of the firm from 1972 until December 2007. He specializes in both Federal and State United States tax matters, including advice with respect to the taxation of foreign operations of U.S. corporations, U.S. operations of foreign corporations, mergers and acquisitions, and international transactions of all kinds.

    He has represented foreign and domestic corporations before the Internal Revenue Service and in tax litigation and has worked with the Treasury Department and Congressional staffs on tax legislation.

    Named as the leading corporate tax lawyer in the world for the past two years by Who’s Who Legal Awards, Mr. Taylor is highly regarded for his work on significant mergers and acquisitions. He was the principal U.S. tax lawyer for:

    • Moore Wallace in its US$6 billion merger with RR Donnelley (2004)
    • Royal Bank of Canada in its US$2.3 billion acquisition of Centura Banks (2001)
    • Royal Bank of Canada in its US$1.46 billion acquisition of Dain Rauscher (2001)
    • UBS in its US$10.8 billion acquisition of PaineWebber Group (2000)
    • BP Amoco in its US$27 billion acquisition of Arco (2000)
    • ING Group in its US$5.97 billion acquisition of ReliaStar (2000)
    • ING Group's US$7.7 billion acquisition of Aetna's financial services and international businesses (2000)
    • Vodafone in its US$65 billion acquisition of AirTouch Communications (1999)
    • BP in its US $55 billion acquisition of Amoco (1998)

    Rankings and Recognition

    • Who's Who Legal Awards– named the leading corporate tax lawyer in the world for three consecutive years (2005, 2006, 2007)
    • New York Super Lawyers – recognized as a leading lawyer (2006, 2007)
    • Law Business Research, The International Who’s Who of Business Lawyers (2005, 2006)
    • Law Business Research, The International Who’s Who of Corporate Tax Lawyers (2005, 2006)
    • Legalease/Legal Business, European Legal Experts (2005, 2006)
    • Chambers USA (2004, 2005, 2006)
    • Chambers Global (2004 -2005, 2006)
    • Woodward/White, The Best Lawyers in America (2005-2006, 2006)
    • PLC Which Lawyer? Yearbook (2005, 2006)
    • PLC Global Counsel Tax Handbook (2004-2005)
    • Euromoney, Guide to the US Leading Lawyers- Best of the Best (2006)
    • The Lawdragon – recognized as a leading lawyer in Private Equity, Project Finance, and Banking & Finance (2006)

    Professional and Not-for-Profit Activities

    • New York University Law School – Adjunct Faculty member
    • International Fiscal Association – member of the U.S. Council
    • American Law Institute’s Federal Income Tax Project – member of the Tax Advisory Group
    • American College of Tax Counsel – member
    • Practising Law Institute – member of the Tax Advisory Committee
    • New York State Bar Association – former Chairman of the Tax Section
    • New York University Institute on Federal Taxation – former Chairman of the Advisory Board

    Events & Speaking Engagements

    • Practising Law Institute’s Tax Strategies for Corporate Acquisitions, Dispositions, Spin-Offs, Joint Ventures, Financings, Reorganizations & Restructurings 2008

    Education

    • 1965, Yale Law School, LL.B.
    • 1962, Yale University, B.A.

    Bar Admissions

    • New York