"Transfer Pricing Adjustment Challenges Receive Green Light from the Tax Court,” Journal of Taxation
In an article published in the November issue of the Journal of Taxation, Julian A. Fortuna and Todd D. Radde provide insight on two recent decisions made by the Tax Court involving transfer pricing under Section 482. In the first decision, Altera Corporation, 145 TC 91 (2015), the court rejected the IRS’ position that stock-based compensation costs of related parties should be included in a cost-sharing agreement. In the second decision, Medtronic, TCM 2016-112, the court rejected the positions of both the IRS and the taxpayer and came up with its own calculation for an arm’s-length transfer price between related parties. Given the results in Altera and Medtronic and the issues being contested in the other transfer pricing cases currently moving through the judicial process, transfer pricing under Section 482 remains a highly contested area of tax law.