David Rosenbloom Talks to Law360: Altera Withdrawal Highlights Warring Transfer Pricing Rules

The Ninth Circuit's withdrawal of the government's win in a cost-sharing suit against Altera threw a set of IRS regulations into muddied waters, but it wasn't the first time courts had struggled to reconcile fundamental contradictions within the agency's transfer pricing rules.

. . .

David Rosenbloom of Caplin & Drysdale, Chtd., meanwhile, questioned the IRS' need to reconcile cost sharing with the arm's-length standard in the first place.

The IRS has the option of writing prescriptive rules where it offers taxpayers an administrative convenience or other benefit. Cost sharing could easily be considered such a "safe harbor," where companies can take advantage of the regime only if they follow a specific approach.

"Cost sharing was always a safe harbor," Rosenbloom contended. "But the IRS wanted desperately to pound it into this arm's-length concept."

To view the full article, please visit Law360’s website (subscription required).

Excerpt taken from the article ”Altera Withdrawal Highlights Warring Transfer Pricing Rules” by Molly Moses for Law360.