3M, IRS Grilled Over Brazilian Law in Transfer Pricing Suit (1)

Eighth Circuit judges focused on 3M Co.‘s level of control over its Brazilian subsidiary during oral arguments Tuesday about 3M’s tax liability, with one judge appearing particularly skeptical of the IRS’s justification for its tax increase.

3M appealed the US Tax Court’s ruling that the IRS was permitted to allocate income from the company’s Brazilian subsidiary to the US parent for tax purposes in order to reflect what 3M’s income would be had the parent and subsidiary’s transactions been at arm’s length. The IRS’s $23.6 million allocation caused a $4.85 million tax liability for 3M, which the company disputes. ...