In Uncategorized on 12/02/2019 at 18:29

It must have been big news in the trade press and the blogosphere when 9 Cir. overturned Altera Corporation & Subsidiaries, 16-70496, filed 7/24/18. Cutting to the cliché, the majority found Treasury didn’t violate the Administrative Procedures Act when it dropped the “comparable uncontrolled transaction” model, the touchstone, lodestone and philosopher’s stone of Section 482 transfer-pricing analysis, for stock-based compensation, via Reg. 1.482-7A(d)(2). The majority found plenty of legislative history that allowed IRS to use “commensurate with income” (cost of the employee stock option benefit must bear a relation to income from the employer). Dissenting, Judge O’Malley found Treasury tromped on Chenery by rationalizing its rulemaking after the fact with arguments it never used at the time. But read it for yourself.

I don’t cover CCAs and the Supremes; the trade press and the blogosphere have resources far beyond those of such as I,  “a general practitioner with very limited experience and mediocre qualifications,” as a far better writer than I put it.

The Tax Court story is spelled out in my blogpost “Sixteen Lawyers – Part Deux,” 7/27/15.

I mention this today, because Ch J Maurice B (“Mighty Mo’) Foley handed this to ex-Ch J L Paige (“Iron Fist”) Marvel to deal with the remand.

The title of this blogpost refers to the Comparable Uncontrolled Transaction (or “CUT”), as, at least when it comes to sharing the costs of stock-based employee compensation, CUT is out.

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