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Need to leave. Any comments on that. Steve, do you want to start . Sure, i can address that. I do not think shifting to a territorial system is right. The two problems that weve highlighted here are earning stripping and the deferred accumulated earnings of these controlled foreign corporations. If we shift to a territorial system in which a u. S. Company is only taxed on its u. S. Source income, and not taxed on its foreign income, there will be all the more incentive for multinationals to strip income from the u. S. Base and shift it abroad. Isnt that the first step and then you deal with all those issues let me finish my answer. So as part of any consideration of territorial, we need to address the earnings stripping issues that were discussing here. One of the observations professor shay made in his article, he wanted treasury to adopt regulations that could fold into tax reform and weve got to address earning stripping and we have to do it sensibly and i think we could fold that i ....
Or in a number of different other circumstances guaranteed debts and the like. Those trigger a current inclusion of these deferred income thats been allowed to accrue tax free just like your i. R. A. Has been allowed to accrue tax free. And in code section 956, congress authorized treasury to write regulations to prevent the avoidance of the provisions of the section through reorganizations or otherwise. So, again, treasury has been given authority under this code section to tackle the kinds of problems, economic challenges that the inversion phenomena exists. As i mentioned, there are over 500 specific grants of authority. Im only highlighting two here. I could speak to many more, but ill let the discussion continue. Thanks. So im going to return back to steve again. Steve, i want to ask if theres any other tools you want to add to that list, and then well spend a few minutes talking about first the impact of using those tools and then secondly how we think that would the wisdom of do ....
I just wanted to mention that one of the tools an Agency Always has is enforcement of the law as it is. And my article was directed at going expanding regulations to address issues that might not be able to reached under current law. But i didnt discuss in that article an antiabuse regulation under section 956 that as i read it, on its terms and because of some peculiar aspects that are quite expansive could actually be used to treat what is called a hopscotch loan from a controlled foreign subsidiary. If we had the picture back up i dont know if thats possible up to the new foreign parent as in many cases, not every case, but in many cases as a deemed dividend to the u. S. Company. So, the real need for regulations, in my view, is cases where that regulation with respect to using the offshore earnings would be cases like that regulation would not reach or that the i. R. S. Which has great discretion under that regulation chooses n ....