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PepsiCo (PEP) wins a $363M dispute with the IRS regarding the use of hybrid securities in a debt...

PepsiCo (PEP) wins a $363M dispute with the IRS regarding the use of hybrid securities in a debt vs. equity issue. At the heart of the decision is a longstanding tension in corporate finance and tax law between equity and debt, where companies devise hybrid securities that look like debt in some circumstances, and like equity in others. In the mid-1990's PEP, did just that in an effort to expand in Europe, by devising securities that were treated as debt in the Netherlands and equity in the U.S. The IRS hit them with a tax bill in 2009, but came up short in today's ruling.
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