Johnson Controls

Johnson Controls has engaged in corporate restructuring that shifted tax liabilities onto its shareholders. In 2016, the company executed a merger with Tyco International, a transaction structured as a tax inversion that moved Johnson Controls' legal domicile to Ireland. The subsequent proxy statement disclosed that the conversion and cash-out of shares would be taxable events for the company's shareholders, effectively transferring the tax burden from the corporation to individual investors. This structure was engineered to achieve a lower corporate tax rate for Johnson Controls itself.

The company has defended this approach in shareholder litigation. In a 2022 brief to the Seventh Circuit, Johnson Controls argued that a dismissed shareholder suit properly upheld the merger's structure. This pattern of using complex corporate reorganizations to shed tax obligations aligns with the tax avoidance exclusion, where corporate maneuvers are designed primarily to evade tax exposure rather than address a genuine operational need.