Steve Dixon Comments on Altera Decision in Law360 Tax Authority

"Top International Tax Cases of 2019"

Law360 Tax Authority

12.23.2019

Steve Dixon commented on two of the year's major international tax case rulings, Altera Corp. and Subsidiaries v. Commissioner and Amazon.com v. Commissioner. In a 2-1 decision in Altera, the Ninth Circuit upheld Treasury's cost-sharing regulation that requires multinational companies to share stock option expenses in joint research-and-development agreements with their affiliates. Upon the taxpayer's petition, the Ninth Circuit declined to rehear the case over the dissent of several judges. The nature of the dispute, as presented in the Ninth Circuit's majority and dissenting opinions, leads many to believe that Altera will appeal to the Supreme Court. The opinion dissenting from the rehearing denial "can be read as encouragement for Altera to seek certiorari," Dixon said. He also noted that the Tax Court decision overturned by the Ninth Circuit would have applied nationally and therefore produced, in the dissenting judge's words, "a situation akin to a circuit split." Amazon.com involved a dispute similar to that in the Tax Court's decision in Veritas about how to price a cost-sharing buy-in payment for intangibles. The taxpayer prevailed at the Ninth Circuit, with the panel endorsing the taxpayer's interpretation of the scope of compensable intangibles. Dixon remarked that the Amazon.com decision "should have put an end to the dispute over what constitutes an intangible [under prior regulations], but it was also reasonable to conclude that Veritas should have ended it."