Wikipedia:Peer review/Pseudo-reorganization acquisitions/archive1

Pseudo-reorganization acquisitions

I've listed this article for peer review because I'd like to see another editor give feedback on the article's structure, scope, and content. I'm looking to try to improve this article over time towards the goal of making it a good article, and I'm looking for feedback tailored towards those ends. The subject is a little bit technical in terms of tax avoidance strategies, so I also would like to make sure that the article is easy for someone without a technical knowledge of business taxation to reasonably understand.

— Mikehawk10 (talk) 17:22, 13 June 2021 (UTC)

JBchrch

Nice, will take a look. JBchrch talk 18:46, 13 June 2021 (UTC)

• If you made the choice to address US law exclusively, that should probably be reflected in the title or in the lead.
• I think the lead is too short. It should probably outline the background and the different strategies that were used under this umbrella.
• I am not clear on what the last sentence of § Background means. It's not clear to me which costs are addressed here.
• Can the term "liability" in § United States be replaced by "tax burden" or another non-technical wording?
• Same at "Killer B" with the "tax liability".
• I think it would be helpful if you could explain the IRC rules mentioned to show how they were used by corporations to perform pseudo-reorganisation acquisitions.
• The article uses the sentence structure "The [●] strategy is a tax-avoidance strategy that utilizes Section [●] of the Internal Revenue Code in order to [●]" three times. Maybe you could vary it a bit?
• Maybe you could break down the implementation of the strategies into several steps? It's a bit hard to follow if they are explained in a single sentence.
• It could be helpful to have a section about their financial impact (if you have such an information) and/or about the policy response to them.
• More broadly, it's not clear right now whether these strategies were good or bad. You know what I mean?
• If there add 4+ citations, consider that it might be WP:OVERKILL

@JBchrch: Regarding the breaking it out into multiple sentences, would an abstract diagram help? I have a few that I've hand-drawn and can try to convert into a PNG, though I'm not familiar with how to make an SVG using the programs I have. I'm currently in the process of trying to implement some of the other advice. — Mikehawk10 (talk) 02:29, 14 June 2021 (UTC)

That would be helpful indeed. It would also help you meet WP:GACR #6 (or, at least, avoid a debate with your reviewer about it). I would not bother too much with the SVG format, though. I think if you can extract a PNG/JPEG out of a Powerpoint slide (or whatever you use), it's largely sufficient. JBchrch talk 09:05, 14 June 2021 (UTC)

• Another comment that occurred to me: if you have a handful of real-life case studies about corporations who used these strategies that would be very interesting.
• Just a heads up: I have added a short description [1], but feel free to amend it if you feel like it doesn't summarize the article appropriately. JBchrch talk 09:12, 14 June 2021 (UTC)
• Added "see also" section [2]. JBchrch talk 15:07, 14 June 2021 (UTC)
• Mikehawk10, I think it would be useful to spell out the legal consequences of performing a reorganization under section 368(a)(1). If I understand correctly, the operation is tax exempt? I looked into adding it myself, but I am really not familiar enough with the sources to do it. JBchrch talk 23:29, 18 June 2021 (UTC)

@JBchrch: Direct repatriations of profits earned abroad (i.e. a cash transfer from a foreign subsidiary to a U.S. parent) were subject to a repatriation tax prior to the passage on the TCJA. The "Killer B", "Deadly D", and "Outbound F" transactions constitute the three known types of pseudo-reorganization acquisitions, and all of them are tax exempt. The exemptions proceed from the lack of the cash flowing from the subsidiary to the parent in a direct repatriation (which would be taxable). The set of "pseudo-reorganization acquisition" is basically a set of techniques that use the IRS's definition of reorganization to acquire another company while indirectly using unrepatriated cash held abroad by a subsidiary.

I'm having trouble so having trouble getting an exact phrasing. Does this help to clarify how this works, and do you have suggestions? Also, is the diagram good? — Mikehawk10 (talk) 06:14, 19 June 2021 (UTC)

@Mikehawk10: sorry my late response. I think I mostly understand what you wrote, but there is still work to be done to make it accessible to a general readership, which we can assume has a very limited understanding of multinational corporations and tax law. So for instance, with The exemptions proceed from the lack of the cash flowing from the subsidiary to the parent in a direct repatriation (which would be taxable), I would write something along the lines of "The transactions are tax exempt because the parent company, located in the United States, technically does not receive any revenue when it performs a pseudo-reorganization acquisition. Instead it performs a set of transactions that are classified as a "reorganization" under Section 368(a)(1) of the Internal Revenue Code. The advantage of performing these transactions is that such "reorganizations" are tax-exempt. However, companies structure these reorganization so as to bring the assets located abroad back to the United States from an economic perspective, while avoiding the tax on repatriated revenue." Or something like that, this is just a quick draft.

The diagram is good 👍👍. I would just add a "visual division" between "the United States" and "abroad" (like a line or two squares or backgrounds of different colors), if you know what I mean. JBchrch talk 00:30, 22 June 2021 (UTC)

Sounds good! I'll rework the diagrams to better deliniate which firms are U.S. persons and which are foreign persons. I've tried to incorporate your blurb above into one of the sections; let me know what you think when you get the chance :) — Mikehawk10 (talk) 01:42, 22 June 2021 (UTC)