Howard Gleckman writes: Treasury could not change that threshold, though Congress could (and bills have been introduced to do so). However, Treasury did block several techniques firms have used to manipulate the ownership test. For instance, the U.S. firm can no longer reduce its value by paying shareholders a big dividend in advance of a deal. Similarly, the new foreign parent can no longer inflate its size by counting passive assets not used in its regular business.

Treasury also attempted to stop several common post-inversion techniques firms use to avoid paying tax when they bring back to the U.S. pre-merger foreign profits that are sitting in overseas affiliates. For instance, the new rules aim to block a practice known as “hopscotching” where an old foreign subsidiary lends money to the new foreign parent which in turn either distributes  the proceeds to U.S. shareholders or invests in the U.S., bypassing the U.S. firm. This allows the funds to come to the U.S. tax-free.   Treasury and Inversion