The Double Irish and the Dutch Sandwich
The Explainer's field guide to exotic tax dodges.
The Outbound F
The Outbound F, based on paragraph (2)(F) of same Internal Revenue Code, represents the state-of-the-art in repatriation dodges. First, a parent company buys another U.S. company, and then forces the new acquisition to promise a large cash transfer at some point in the future (which, as a domestic, within- corporation transfer, would be tax-free.) Then the acquired company sets itself up as a subsidiary in another country, borrows a whole bunch of cash from a previously existing sister subsidiary, and sends it back home to the parent. That switcheroo effectively eliminates the tax burden, because the subsidiary had promised to send over the cash when it was still American.
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Explainer thanks Edward D. Kleinbard of the University of Southern California Law School.
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J. Bryan Lowder is the Slate editorial assistant for culture.