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Altera Loses Second Chance to Reverse Stock Compensation Decision

June 7, 2019, 5:53 PM

Intel’s subsidiary Altera Corp. lost an effort to change a federal appeals court ruling that could lower the deductions it and other companies can take for employee stock-based compensation expenses.

A 2-1 opinion from the U.S. Court of Appeals for the Ninth Circuit, released June 7, ruled against the company—the same way a panel of the same court ruled in July 2018. That decision was withdrawn after one of the judges died between the arguments and the opinion issuance.

  • The case has been closely watched by tech giants like Facebook.Inc, Apple Inc., and Cisco Systems Inc., which have cited the Altera case in their financial statements. The appeals court ruling means Altera has to share the costs of stock-based compensation with its domestic and international units, preventing it from deducting the full cost.
  • The court also ruled that the IRS’s 2003 cost-sharing regulations were written in compliance with the Administrative Procedure Act. The company had said the agency didn’t consider comments as required by the APA.
  • In July 2018, the Ninth Circuit reversed a U.S. Tax Court 2015 decision in the matter before withdrawing its opinion and replacing deceased Judge Stephen Reinhardt with Judge Susan Graber on the three-judge panel.

To contact the reporter on this story: Sony Kassam in Washington at skassam1@bloombergtax.com

To contact the editors responsible for this story: Meg Shreve at mshreve@bloombergtax.com; Kathy Larsen at klarsen@bloombergtax.com