Rocco Femia and David Blair discuss the Ninth Circuit’s reversal of its previous decision in Xilinx et al. v. Commissioner and affirmation the Tax Court's decision on employee stock option expenses in cost-sharing agreements. "It's a reaffirmation of the arm's-length standard," said Femia. Blair questioned the government's tactics in the case, noting that it was the "failure to embrace his rationale" in the original opinion that gave Judge Fisher the "permission to change his vote." He also said he believes the IRS will seek en banc review but that it is unlikely to pursue the case to the Supreme Court since it has already issued regulations that address issues underlying the case.