The Portfolio describes the federal income tax consequences that occur when a U.S. corporation or U.S. partnership converts into, merges with or becomes the subsidiary of a foreign corporation through an exchange of stock.

It focuses on an aspect of the Internal Revenue Code that was added by Congress as part of the American Jobs Creation Act of 2004, which imposes negative tax consequences on an inverted company, by reducing, or in some cases, eliminating the tax benefits derived from a corporate inversion.

Guidance helps companies determine whether they meet the three requirements to be subject to the negative tax consequences of an inverted corporation.