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April 14, 2021

SPACs: the confluence of A-list celebs and Sec. 7874

Doug McHoney (PwC's US International Tax Services (ITS) Leader) and Thomas Groenen (PwC's US ITS-Financial Services Leader) discuss the renewed interest in special purpose acquisition companies (SPACs). Doug and Thomas cover: how Thomas made his way from the UK to the US; Thomas's advice for individuals interested in moving to the United States to become tax professionals; what a SPAC is and how it generally functions; the history of SPACs—dating back to the British 'South Sea bubble' in the early 18th century; how SPACs compare to and interrelate with IPOs; how and why individuals and entities invest in SPACs; the tax implications for SPAC investors; considerations regarding the SPAC's jurisdiction; the SPAC lifecycle, from founding to de-SPACing; the importance of choosing the correct investment vehicle (both corporate v. pass-through and domestic v. foreign); how the passive foreign investment company (PFIC) regime interplays with foreign SPACs; and the possible future of SPACs.­

Timestamps:

  • 01:08 - How Thomas made his way from the UK to the US
  • 02:19 - Thomas's advice for individuals looking to move to the US to become tax professionals
  • 04:04 - What a special purpose acquisition company (SPAC) is and how it generally functions
  • 09:05 - How and why individuals and entities invest in SPACs
  • 11:56 - Tax implications for persons investing in SPACs
  • 16:24 - The timeline of a SPAC from founding to de-SPACing
  • 20:10 - The importance of choosing the correct investment vehicle (corporate v. pass-through)
  • 22:40 - The importance of choosing the correct investment vehicle (domestic v. foreign)
  • 27:54 - How the passive foreign investment company (PFIC) regime interplays with foreign SPACs
  • 33:50 - The future of SPACs and key takeaways

 

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Doug McHoney

International Tax Services Co-Leader, PwC US

Geoff Jacobi

ITS, Knowledge Management Managing Director, PwC US

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