Disney, IBM Owe Tax on Foreign Royalties, NY High Court Says (1)

Walt Disney Co. and IBM Corp. failed to convince New York’s top court Tuesday that they were improperly double taxed on royalty payments from their foreign affiliates.

The companies wanted the New York Court of Appeals to overturn intermediate appeals court rulings that barred them from deducting payments from their foreign affiliates that produce and license intellectual property. The ruling against them in the consolidated cases has big consequences for Disney and IBM, which have $4 million and $64 million on the line, respectively.

The appeals court “correctly interpreted the statutes as permitting a tax deduction only where a related ...