Layla Asali was quoted regarding the IRS and Treasury's recently released final regulations on when a company will be considered to have substantial business activities in a foreign country for purposes of the anti-inversion rules. The decision to largely keep in step with the steep 25 percent activity threshold of the temporary regs, while disappointing, should come as no surprise, Asali said. "I think the takeaway here is [the IRS] is committed to their test and they're not really responsive to the hue and cry of the practitioner community.... There were people who have said the 25 percent threshold practically has the effect of writing the substantial business activities prong out of the statute, by making it so hard for any enterprise of any significant size to meet this test. The bigger the business, the harder it is," she added.

The final regs also retained the subjective antiabuse rule of the temporary regs. Asali noted that the IRS and Treasury "no longer think it is appropriate to supplement bright-line rules with a facts-and-circumstances test that potentially could help taxpayers, as was the case with the 2006 regulations, and they instead believe it is appropriate to add on a facts-and-circumstances antiabuse rule to the 25 percent test. Where we are now is so much the opposite approach of where we started."