On March 21, 2011, AT&T announced that it will buy T-Mobile from Deutsche Telekom for $39 billion. This transaction will be tax free to Deutsche Telekom (DT) not because it qualifies as a reorganization, but because DT is a foreign corporation and capital gains of nonresidents are generally not subject to U.S. taxation because they are deemed to be foreign source. Also, DT is protected from taxation by article 13(5) of the Germany-U.S. tax treaty, which provides that capital gains are generally taxable only by the country of residence.
Avi-Yonah, Reuven S. "Money on the Table: Why the U.S. Should Tax Inbound Capital Gains." Tax Notes Int'l 63, no. 1 (2011): 41-7.
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