Abbott Labs vs. Commissioner
Abbott Labs vs. Commissioner
Jurisdiction
United States, Tax Court and Seventh Circuit
Summary of Facts
Abbott Labs challenges IRS regulations requiring cost-sharing arrangements and service charges to include stock-based compensation costs. This case is a continuation of disputes seen in Altera and Xilinx.
Key Issues
The validity of regulations mandating the inclusion of stock-based compensation in cost bases for transfer pricing, and whether these rules align with the arm’s-length standard.
Decision and Reasoning
The case is in its early stages, with Abbott Labs contesting the regulations. The outcome depends on interpretations of Section 482 and whether the Tax Court will follow Ninth Circuit precedent from Altera.
Importance and Implications
The decision could have significant implications for how multinationals structure compensation and cost-sharing arrangements. A ruling in favor of Abbott Labs might challenge existing IRS regulations and influence future tax litigation.
