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Tax Issues in International M&A: Strategies for Buyers and Sellers

Section 338(g) Election; Navigating CFCs, Subpart F, GILTI, and the BEAT; Use of Blocker Corporations

Note: CPE credit is not offered on this program

Recording of a 90-minute premium CLE video webinar with Q&A

This program is included with the Strafford CLE Pass. Click for more information.
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Conducted on Wednesday, September 29, 2021

Recorded event now available

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This CLE course will examine the tax issues U.S. buyers and sellers must consider in negotiating and structuring cross-border M&A transactions. The panel discussion will include controlled foreign corporations (CFCs), Subpart F, the Section 338(g) election, global intangible low-taxed income (GILTI), and the base erosion and anti-abuse tax (BEAT).

Description

The Tax Cuts and Jobs Act (TCJA) significantly changed the tax code that U.S. sellers and buyers must now consider in structuring cross-border M&A transactions. These include the new global intangible low-tax income (GILTI) and base erosion anti-avoidance tax (BEAT) regimes.

GILTI imposes a minimum tax on U.S. parent companies concerning the earnings of their foreign subsidiaries. BEAT imposes a minimum tax on deductible payments made by U.S. corporations to related foreign parties, including interest, payments for services, royalties, and depreciable assets.

TCJA significantly altered the effect of a Section 338(g) election, which allows a purchasing corporation to treat a qualified stock purchase as an asset purchase. CFCs owned by non-corporate investors face significant tax issues, making the Sect. 338(g) election subject to negotiation between the buyer and seller.

The structure of the target pre- and post-merger, and the tax elections made in the transaction, will determine the ultimate tax liability of the buyer and seller. Counsel must consider differing tax rates between countries and how certain actions may result in capital gains or ordinary income in the U.S. into account.

Listen as our authoritative panel discusses the tax issues associated with cross-border mergers and deal-structuring strategies that can impact the tax liability of buyers and sellers.

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Outline

  1. TCJA: how changes to the corporate tax code have impacted M&A; Section 245A
  2. Acquisition without a Section 338 (g) election
    1. Strategies for reducing tax liability
    2. Buyer concerns
    3. Seller concerns
  3. Implications of a Section 338(g) election
    1. Strategies for reducing tax liability
    2. Buyer concerns
    3. Seller concerns

Benefits

The panel will review these and ohter critical issues:

  • How might the reduction in the U.S. corporate tax rate affect the decision on where to locate the merged entity?
  • What changes were made under TCJA regarding taxation of CFCs, and how do they impact M&A deal structure?
  • Why might the Section 338(g) election be a matter of contention in a merger agreement?

Faculty

Chesman, Adam
Adam Chesman
Senior Director, Cross-Border Mergers and Acquisitions Tax Leader
RSM US

Mr. Chesman has broad experience in federal, state, and international taxation, including consulting, compliance, and...  |  Read More

Romero, Jeff
Jeff A. Romero
Attorney
Skadden Arps Slate Meagher & Flom

Mr. Romero advises public and private companies on a broad range of U.S. federal income tax matters, with a...  |  Read More

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