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Eaton Corporation and Subsidiaries v. Commissioner of Internal Revenue

On July 26, 2017 the United States Tax Court ruled in favor of Eaton Corp. in its case against the IRS. The case involved the IRS' cancellation of two of Eaton's Advance Pricing Agreements, among other issues. The Court ruled that the IRS' decision to cancel the two APAs was an abuse of discretion for tax years 2005 and 2006.
July 2017

Amazon.com, Inc. and Subsidiaries v. Commissioner of Internal Revenue

On March 23, 2017 the United States Tax Court ruled in favor of Amazon.com in its case against the IRS. The case involved a cost sharing arrangement with Amazon's European operations and the amount of the buy-in payment for pre-existing intangibles. The Court held that the IRS' calculation of the buy-in payment, which used a discounted cash flow analysis, was arbitrary, capricious, and unreasonable. It further held that Amazon's calculation, which used the Comparable Uncontrolled Transaction method, was appropriate, with certain adjustments.

The parties entered into a Stipulated Decision on July 5, 2017 that calculated Amazon's overpayment of tax ($9.5 million) and underpayment of tax ($2.5 million) for tax years 2005 and 2006. The IRS has 90 days to decide whether to appeal the case.
March and July 2017

Medtronic, Inc. and Subsidiaries v. Commissioner of Internal Revenue

The United States Tax Court has found in favor of Medtronic, Inc. and its subsidiaries (Petitioner), sustaining the use of the CUT method to analyze payments for licensing royalties, although the Court also found that adjustments to the CUT were required. These included additional adjustments not initially applied by the Petitioner for know-how, profit potential and scope of product. (The IRS subsequently appealed the case to the U.S. Court of Appeals for the 8th Circuit.)
June 9, 2016

Guidant Corporation and Subsidiaries v. Commissioner of Internal Revenue

In its opinion filed on February 29, 2016, the U.S. Tax Court held in favor of the Commissioner of Internal Revenue (Respondent), stating that neither Internal Revenue Code §482 nor the regulations thereunder require the Respondent to always determine the separate taxable income of each controlled taxpayer in a consolidated group contemporaneously with the making of the resulting adjustments. The Tax Court further held that §482 and the regulations thereunder allow the Respondent to aggregate one or more related transactions instead of making specific adjustments with respect to each type of transaction.

On July 19, 2016, Boston Scientific Corporation entered into a Stipulation of Settled Issues with the IRS that is intended to resolve all disputes related to transfer pricing issues for Guidant Corporation’s 2001 through 2006 tax years and Boston Scientific's 2006 and 2007 tax years. The Stipulation of Settled Issues is contingent upon the IRS Office of Appeals applying the same basis of settlement to all transfer pricing issues for Boston Scientific's 2008 through 2010 tax years. If finalized, the settlement would resolve substantially all aspects of the controversy, and Boston Scientific would make net tax payments to the IRS of approximately $275 million.
July 19, 2016

Altera Appeal

Following the filing of its appeal on February 23, 2016, the Commissioner of Internal Revenue filed a brief with the Court of Appeals for the Ninth Circuit on June 26, 2016, arguing that the Tax Court erred as a matter of law in holding that the 2003 cost-sharing amendments are invalid to the extent they require the sharing of stock based compensation costs, and that therefore the decisions of the Tax Court should be reversed.
February 23, 2016

Coca-Cola Deficiency Redetermination Petition

On December 14, 2015 the Coca-Cola Company submitted a petition to the U.S. Tax Court, requesting a redetermination of the deficiencies in Federal income tax for the years ended December 31, 2007, 2008 and 2009, as set forth by the Commissioner of Internal Revenue in a Notice of Deficiency dated September 15, 2015. The total amount in dispute is over $3.3 billion for the 3-year period. Major issues in the dispute include the method used to allocate profit to seven foreign subsidiaries, which use licensed trademarks and formulas to carry out the manufacture and sale of beverage concentrates in markets outside of the United States, as well as the application of correlative adjustments for foreign tax credits. The Coca-Cola Company claims that it used the same allocation method that had been reviewed and approved by the Internal Revenue Service during audits of tax years from 1996 through 2006, the same that was established in a Closing Agreement with respect to the 1987 through 1995 tax years, entered into in 1996, following a transfer pricing audit of tax years 1987 through 1989.
December 14, 2015

Altera Corporation and Subsidiaries vs. Commissioner of Internal Revenue

On July 27, 2015 the United States Tax Court issued its ruling regarding the petition filed by Altera Corporation and its subsidiaries (Petitioner) against the Commissioner of Internal Revenue (Respondent). The court found in favor of the Petitioner, concluding that on an arm’s length basis employee profit sharing should not be included in compensation between related parties under Qualified Cost Sharing Agreements.
July 27, 2015

U.S. Court of Appeals Ruling No. 13-60684

The United States Court of Appeals for the Fifth Circuit issued its ruling on the case of BMC Software, Inc. v. Commissioner of Internal Revenue. The case discussed issues relating to § 965 regarding repatriation of dividends and § 482. Following an audit, BMC had entered into a Closing Agreement, making primary and secondary adjustments to its transfer pricing arrangements. The Commissioner argued that the secondary adjustment affected BMC’s application of § 965. The court ruled in favor of BMC, reversing the tax court’s previous ruling.
March 13, 2015


Marzen Artistic Aluminum Ltd. v. The Queen

Canada's Federal Court of Appeal upheld a decision by the Tax Court of Canada, which in 2014 ruled that the Canada Revenue Agency had largely been correct in reassessing the taxable income of Marzen Artistic Aluminum Ltd. The intercompany transactions at issue involved fees paid to the company's wholly-owned Barbados based subsidiary during taxation years 2000 and 2001 for sales, marketing and support services. The Tax Court of Canada had determined that it was appropriate to apply the CUP method rather than the TNMM, which was advocated by the company's expert.
January 29, 2016

Sketchers USA Canada Inc. and the President of the Canada Border Services Agency

On March 2, 2015 the Canadian Federal Court of Appeal issued its ruling in the case between Skechers USA Canada, Inc. and the President of the Canada Border Services Agency. The case is regarding whether specific research and development costs should be included in the dutiable value of the goods when they are imported into Canada. The appeals court sustained the previous ruling, concluding that the research and development costs should be considered in the dutiable value of the goods.

McKesson Canada Corp v. The Queen

The Tax Court of Canada rejected McKesson's appeal of a transfer pricing adjustment related to the sale of accounts receivable to its foreign parent.  The Tax Court found that the the subject transaction was "more of a tax avoidance plan than a structured finance product."
December 13, 2013

General Electric Capital Canada Inc. V. The Queen

The Federal Court of Appeals (“FCA”) has dismissed the Crown’s appeal of a decision by Justice Robert Hogan of the Tax Court of Canada to vacate assessments issued by the Minister of National Revenue. The assessments had denied the full amount of the deductions claimed by General Electric Capital Canada in computing its income with respect to fees paid to General Electric Capital US, its parent company, for guaranteeing its capital market borrowings on the basis that such fees would not have been paid by an arm’s length party for the guarantee provided.
November 1, 2010

GlaxoSmithKline Inc. V. The Queen

The Canadian Supreme Court ruled in the case of Her Majesty The Queen v. GlaxoSmithKline Inc. regarding the intercompany prices established in purchases of ranitidine, the active ingredient used in the anti-ulcer drug Zantac, from a related party during years 1990 through 1993. The Supreme Court partially reversed an earlier determination by the Tax Court, upholding a determination by the Federal Court of Appeals in its conclusion that if other transactions are relevant in determining whether transfer prices are reasonable, these transactions should be taken into account. However, the Supreme Court did not determine whether the transfer pricing used by GlaxoSmithKline Inc. was reasonable, and instead remitted the matter back to the Tax Court.
October 18, 2012

Avotus Corporation V. The Queen

The Tax Court of Canada upheld the right of Avotus Corporation to deduct from its Canadian income losses incurred by its subsidiary in Puerto Rico. The Tax Court found that the Puerto Rican subsidiary was Avotus’s agent under a validly executed agency agreement, rejecting the CRA’s claim that the written agreement was unacceptable because the subsidiary’s conduct was inconsistent with that of an agent.
November 21, 2006


Bausch and Lomb
Central de Gas De Chihuahua
E.I. Dupont De Nemours and Company
National Westminster
Seagate - Intercompany Asset Sale
Seagate - Intercompany Cost Sharing
Symantec (Veritas)
Texaco (Aramco)
Xilinx - 2005 Tax Court Ruling Against IRS
Xilinx - 2009 Court of Appeals Ruling Overturning Prior Ruling Against IRS

Altama Delta Corporation
Bank of America
Daniel F. Keller & Marilyn F. Keller
Eli Lilly
First Security Bank of Utah (1967)
First Security Bank of Utah (Appeal, 1971)
First Security Bank of Utah (1972)
General Electric
Lufkin Foundry and Machine Company
National Semiconductor
Nissho Iwai American Corporation
Pacar, Inc. and Subsidiaries (1985)
Pacar, Inc. and Subsidiaries (Appeal, 1988)
Perkin Elmer Corporation and Subsidiaries
Pikeville Coal Co.
Procter and Gamble
Ross Glove Company
Toyota Motor Sales USA
United States Steel Corporation
United States Steel Corporation (1977)
United States Steel Corporation (Appeal, 1980)
UPS Opinion
Westreco, Inc.

For professional transfer pricing consulting services, contact Economic Consulting Services at 202-466-7720.
Or email jerrie.mirga@economic-consulting.com