Which of the Following Statements Regarding Inversions Is Incorrect

question 83

Multiple Choice

Which of the following statements regarding inversions is incorrect?

• A)The objective of an inversion is to avoid U.S.tax on worldwide income.
• B)In an inversion,a U.S.corporation reorganizes as a foreign corporation.
• C)The IRS will disregard the inversion if the former shareholders of the U.S.corporation continue to own 60% of the foreign corporation's stock.
• D)The IRS will examine whether the foreign corporation conducts substantial business in the foreign country of incorporation to determine if the inversion is valid.

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Definitions:

Verdict

The decision made by a jury or judge in a legal case, concluding the trial and determining the outcome.

Judgment

A formal decision made by a court regarding the rights and liabilities of parties in a legal action or proceeding.

Diversity of Citizenship

A legal principle allowing federal courts to hear cases where the parties are citizens of different states or countries, aiming to prevent state court bias.

Principal Place of Business

The primary location where a corporation's executives direct, control, and coordinate the business activities.