The Strategic Use of Short‐Term Loans to Access Offshore Cash

Abstract

In times of uncertainty, maintaining a strong cash position generally enhances a corporation's financial flexibility; however, holding significant cash balances offshore to avoid tax consequences associated with repatriations can make the amounts unavailable for use in the United States. A viable, tax‐effective strategy for U.S. multinational corporations seeking to access offshore cash is to structure short‐term, intercompany loans from their subsidiaries operating as foreign controlled corporations. By coordinating the treasury and tax functions in this area, corporations can successfully address the applicable IRS rules while providing liquidity to support domestic operations. © 2015 Wiley Periodicals, Inc.