The US tax rescission doctrine: when the parties want an agreement to disappear

By Eric D Ryan and Joe Helm

The old saw about the best-laid plans of mice and men also goes for international tax planning and transactions with significant tax consequences.

Sometimes the business and/or financial assumptions around the planning turn out to be mistaken, sometimes the resulting structure turns out to be too complex to manage relative to the savings it produces and sometimes parties just mutually decide to back out of a deal after some or all of its parts have been executed. What is to be done when the consequences of such a transaction or set of transactions might create undesirable commercial or tax effects?

Most of the time, the answer is, unfortunately, not much, absent ‘strong proof’ that the form of the transaction did not comport with the parties’ intent, or mistake (in the formal legal sense) or fraud (in other words, the common law grounds for unilateral rescission) — circumstances quite challenging to find in the inter-company context. It may be that the parties need to terminate the original agreement and transfer assets and liabilities back between them at the then-current values — thus creating two separate transactions, with separate, likely unwanted, consequences…

If you are registered and logged in to the site, click on the link below to read the rest of the DLA Piper briefing. If not, please register or sign in with your details below.

Sign in or Register to continue reading this article

Sign in

Register

It's quick, easy and free!

It takes just 5 minutes to register. Answer a few simple questions and once completed you’ll have instant access.

Register now

Why register to The Lawyer

 

Industry insight

In-depth, expert analysis into the stories behind the headlines from our leading team of journalists.

 

Market intelligence

Identify the major players and business opportunities within a particular region through our series of free, special reports.

 

Email newsletters

Receive your pick of The Lawyer's daily and weekly email newsletters, tailored by practice area, region and job function.

More relevant to you

To continue providing the best analysis, insight and news across the legal market we are collecting some information about who you are, what you do and where you work to improve The Lawyer and make it more relevant to you.

Briefings from DLA Piper

View more briefings from DLA Piper

Analysis from The Lawyer

View more analysis from The Lawyer

Overview

3 Noble Street
London
EC2V 7EE
UK
http://www.dlapiper.com

Turnover (£m): 1,566.29
No. of lawyers: 3,961 (UK 200)
Jurisdiction: global
No. of offices: more than 75
No. of qualified lawyers: 625 (International 50)

Jobs