"Tax Arbitrage and Economic Substance" Please respond to the following:
• 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 (1) arbitrage transaction to the client using hybrid entities and one (1) using 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.