3M Income Tied to Brazilian Entity Properly Shifted by IRS (1)

The IRS was permitted to reallocate income from 3M’s Brazilian subsidiary to the US parent company for tax purposes to reflect what would have happened if the two companies weren’t connected to each other, the US Tax Court ruled.

Seven judges signed onto an opinion backing a 1994 Treasury regulation that 3M Co. argued wasn’t issued properly. Two further judges agreed that the IRS should win the case based on a statute. The ruling could impact other multinational companies: A final ruling in Coca-Cola Co.'s Tax Court case has been on hold pending the court’s decision in 3M’s case.

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