A Transcontinental 'a' Train? Foreign Mergers Under Section 368(A)(1)(A)

Abstract

In this article, I address the tax consequences to U.S. investors from mergers between foreign corporations. The combination of the increasingly international capital markets and the global merger movement has highlighted the inequity of Treasury's current stance to deny such transactions the benefit of tax-free reorganization status under Section 368(a)(1)(A) of the Internal Revenue Code. The article argues that permitting foreign mergers to qualify as "A" reorganizations is faithful to the original intent of 368(a)(1)(A) and uses this historical perspective to provide a framework for developing a federal tax law definition of "merger or consolidation." The article concludes that broadly applying such a tax-centered conception of the phrase can also help resolve the inequity between foreign and domestic transactions.