The Obama Administration’s international tax proposals would, if enacted, be likely to increase the U.S. tax costs of many multinational groups that are owned by a U.S. entity. One possible response by the managers or owners of such a group would be to restructure the group via an inversion transaction so that the group would have a foreign corporate parent instead of a US parent entity. Inversions were in vogue in the late 1990s and the early years of this decade until Congress passed the American Jobs Creation Act of 2004, adding section 7874 to the Internal Revenue Code. The new law effectively negated the tax benefits of inversions into tax haven parent corporations where the ownership of the group was not significantly affected by the restructuring. Section 7874 is widely believed to have had a severe chilling effect on inversions of publicly held corporations, but these inversions may stage a comeback. In addition to potentially increased tax costs due to new international tax rules, factors such as reduced unrealized gains due to the economic downturn of 2008-2009 and rapid growth in foreign markets might lead to more inversions in the future. It is timely, therefore, to review the workings of section 7874 and the guidance issued by the IRS and the Treasury Department on major issues arising under the statute.