> And those tax rules tech companies take advantage of are not loopholes or tax breaks. "The regulations, however, had significant unintended consequences and

> And those tax rules tech companies take advantage of are not loopholes or tax breaks. "The regulations, however, had significant unintended consequences and opened the door to a host of tax avoidance schemes. Under Subpart F, passive income paid from one separate legal entity to another separate legal entity – even if they were both within the same corporate structure – was immediately taxable. However, with the implementation of the check-the-box regulations a U.S. MNC could set up a CFC subsidiary in a tax haven and direct it to receive passive income such as interest, dividend, or royalty payments from a lower tiered related CFC without incurring Subpart F income. [...] On March 26, 1998, Treasury and IRS then proposed regulations to close the loophole opened by the check-the-box rule." Page 12 http://www.hsgac.senate.gov/download/?id=7B9717AF-592F-48BE-815B-FD8D38A71663 http://www.hsgac.senate.gov/download/?id=7B9717AF-592F-48BE-...