Slap Me in the Face: Altera Corp. & Subs. v. Commissioner (Cost Sharing Arrangement)By Robert Robillard - 13 August 2015
This blogpost originally appeared on rbrt.ca.
In Altera Corp. & Subs. v. Commissioner, the IRS got slapped in the face.
TaxProf Blog (Paul L. Caron, Editor) writes in “Hickman: The Tax Court Delivers An APA-Based Smackdown”:
“In Altera Corp. & Subs. v. Comm’r,, 145 T.C. No. 3 (July 27, 2015) the Tax Court unanimously invalidated regulations under Section 482 requiring participants in qualified cost-sharing arrangements to include stock-based compensation costs in the cost pool in order to comply with the arm’s length standard, on grounds that the regulations were not the product of reasoned decisionmaking as required by Administrative Procedure Act (APA) § 706(2)(A) and Motor Vehicle Manufacturers Association of the United States v. State Farm Mutual Automobile Insurance Co.,, 463 U.S. 29 (1983), known in administrative law circles as State Farm. From top to bottom, the Altera opinion reads like a treatise on general administrative law requirements and norms. Without delving into the policy details of the regulation at issue, the following paragraphs summarize the Tax Court’s opinion and its potential implications.”
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