Law360 Quotes Elizabeth Stevens on Top International Tax Cases to Watch in 2025

Major multinational corporations such as 3M and Coca-Cola will continue to litigate high-stakes international tax cases during 2025, including transfer pricing disputes with billions of dollars on the line and fights against regulations that allegedly exceed the government's authority.

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According to Elizabeth Stevens, a Member of Caplin & Drysdale, although Liberty Global has conceded a nonbusiness-motivated transaction, a ruling could still be helpful to other taxpayers because it could determine when the doctrine applies at all. If the decision establishes a relevancy test, then in situations where it does not apply, there's no need to worry about proving to the IRS that the substantial business requirement is met, she said.

"I am surprised that the taxpayer conceded that issue because that is sort of putting all your eggs in one basket," Stevens said. "But I think they have a good argument that there is a threshold relevancy determination. Whether it applies to them depends on what that looks like."

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Stevens noted that pharmaceutical company Amgen made similar arguments in alleging that the IRS' adjustments to its income were unconstitutional, and the Tax Court judge in that dispute summarily denied its motion. That at least one Tax Court judge already gave this argument short shrift is, for Coca-Cola, "a potential harbinger of what the taxpayer can expect if they raise those arguments on appeal," she said.

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According to Stevens at Caplin & Drysdale, when companies apply the acquisition price method to a platform contribution transaction, it is very common to deduct routine operating value from the acquisition price to get to the value of the intangibles. The IRS has begun saying that companies cannot make these deductions because it is not strictly specified in the regulations, she said.

Stevens added, "That is one issue that will be before the Tax Court that has potential ramifications for lots of other taxpayers."

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