The ability to arbitrage the differences between international tax systems is a very important aspect of
international tax planning. Imagine you are an international tax advisor providing tax-planning advice to a
client with operations in different international tax jurisdictions.
Propose one arbitrage transaction to the client using hybrid entities and one using a source of income that
will reduce the tax liability of the client.
Recommend a defense on each transaction where the IRS pursues the business purpose or economic
substance to reject the arbitrage transactions