Exercise 8-9 [Tax]

You are a member of a tax department of a sizable pharmaceutical company, Anslee pharmaceuticals, which is considering a merger with a smaller company in Germany. The president of your company, George Matterhorn, wants to engineer the terms of the perspective merger to maximize its potential favorable effects on US taxes. He has heard that by constructing the merger as a corporate inversion in establishing the merged company's tax address in Germany he may be able to achieve its objective.

Mr. Matterhorn has asked you to prepare a technical memo discussing corporate inversions your memo should cover these topics

• definition and explanation of a corporate inversion
• tax effects of corporate conversions: benefits and risk