In the new version of his Stop Tax Haven Abuse Act, Sen. Carl Levin, D-Mich., once again proposed to modify the definition of residence for domestic corporations (IRC section 7701). Section 103 of the act seeks to: stop companies run from the United States claiming foreign status by treating foreign corporations that are publicly traded or have gross assets of $50 million or more and whose management and control occur primarily in the United States as U.S. domestic corporations for income tax purposes. [Emphasis in original.] This is not a new suggestion. In response to the inversions of the early 2000s, the Joint Committee on Taxation made a similar proposal. Moreover, the ‘‘managed and controlled’’ test is well established in the jurisprudence of our trading partners (for example, the U.K.) and is similar to determining the ‘‘place of effective management,’’ which is included in all tax treaties based on the OECD model (for example, in article 8).
Avi-Yonah, Reuven S. "Beyond Territoriality and Deferral: The Promise of "Managed and Controlled"." Tax Notes Int'l 63, no. 9 (2011): 667-8.
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