Which of the following statements regarding inversions is incorrect?
A)The objective of an inversion is to avoid U.S.tax on worldwide income.
B)In an inversion,a U.S.corporation reorganizes as a foreign corporation.
C)The IRS will disregard the inversion if the former shareholders of the U.S.corporation continue to own 60% of the foreign corporation's stock.
D)The IRS will examine whether the foreign corporation conducts substantial business in the foreign country of incorporation to determine if the inversion is valid.

Question

Quizplus · Accepted Answer

The IRS does not disregard an inversion if the former shareholders of the U.S. corporation continue to own 60% of the foreign corporation's stock; in fact, such a situation may indicate that an inversion has occurred. The IRS does, however, have rules regarding ownership percentage and continuity of business operations to determine the validity of an inversion.

Which of the Following Statements Regarding Inversions Is Incorrect