HIDE

Firm News

Client Alert

Altera Reversal Cites Stanley C. Ruchelman

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.

/Source