On July 24, 2018, the Ninth Circuit of the U.S. Court of Appeals handed down its ruling in Altera Corporation & Subsidiaries v. Commr. The judgement reverses an earlier Tax Court decision and holds that “related entities must share the cost of employee stock compensation in order for their cost-sharing arrangements to be classified as qualified cost-sharing arrangements and thus avoid an I.R.S. adjustment, was invalid under the Administrative Procedure Act.”
In its ruling, the Appeals Court cited contemporary commentators, including a 1989 article entitled "Transfer Pricing of Intangibles after the Section 482 White Paper" from the Journal of Taxation. In it, Stanley C. Ruchelman and his co-authors discuss the Treasury’s motivations, noting that by attempting synthesis between the arm’s length and commensurate with income provisions, the Treasury was moving away from a view of the arm’s length standard as grounded in comparability.