Coca cola transfer pricing11/29/2023 ![]() Until then, it would be premature to declare a return to the days of IRS futility in transfer pricing cases. It may well be that the IRS's brief run of successes is about to draw to a close, but it's also possible that a successful second Medtronic appeal and a stricter APA revenue procedure will reinforce the agency's position. The IRS is working on another updated revenue procedure governing APAs, and it would take little more than a few minor word changes to give the agency the upper hand in any future Eaton-like cases. And the case was decided based on the text of a revenue procedure that was superseded years ago. Coke forecasts slightly faster growth, with organic. ![]() Neither taxpayers nor the IRS typically invest substantial time and resources negotiating an APA only to cancel it after it goes into effect. Both companies are targeting roughly 9 higher earnings in 2023 (after accounting for currency exchange rate shifts). It's hard to predict how the Eighth Circuit would decide the case, but there is no reason to rule out the possibility that a second appeal would succeed.Īnd Eaton involves a narrow question that rarely arises. ![]() The Tax Court's second opinion endorsed a highly unusual transfer pricing method that may be vulnerable in a new appeal, and the appeal window remains open to the government. Commissioner opinion.ĭoes this mean the IRS's short-lived winning streak is at an end? Not necessarily. And in arguably its greatest win, the IRS persuaded the Tax Court to uphold its CPM analysis in the 2020 Coca-Cola v. Commissioner appeal, in which the Ninth Circuit observed that the IRS would have won under current law. Commissioner and received an encouraging consolation prize in its unsuccessful Amazon v. In 2019 the IRS won a major victory in its appeal of Altera v. The IRS successfully appealed the first Medtronic opinion in 2018, leading the Eighth Circuit to remand the case to the Tax Court. This arguably breaks what some considered to be a rare winning streak for the IRS in transfer pricing cases, an area in which the agency has historically struggled in litigation. The IRS outright lost its appeal in Eaton, and the outcome in Medtronic was closer to a loss than a win. In August the Sixth Circuit affirmed the Tax Court's 2017 ruling that the IRS's cancellation decision was an abuse of discretion because Eaton's errors didn't satisfy the materiality standard set by the relevant IRS revenue procedure.
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