Generally, the tax issues implicated when the target or acquiror is foreign or has foreign shareholders, or where the target owns foreign subsidiaries or branches that are being acquired, include U.S. tax issues and foreign tax considerations. For example, for the transaction to be tax-free to foreign shareholders, they may need to receive shares of an acquiror that is organized in the same jurisdiction as the target. This practice note deals with certain U.S. tax rules governing U.S.-owned foreign businesses and foreign-owned U.S. businesses. Specifically, this note will discuss rules specific to tax-free transactions under Section 367 of the Internal Revenue Code (the Code); leverage and reducing taxable income under the rules applicable to earnings-stripping and withholding (26 USCS ยง 163); FIRPTA and the taxation of foreign shareholders on dispositions of U.S. real property holding corporations; the inversion rules under Section 7874, where a U.S. corporation expatriates to a ...