Case: IRS Wrongly Calculated Value of Amazon’s Pre-Existing Intangibles By Including Residual-Business Assets (9th Cir.) (IRC §482)

The definition of “intangible” doesn’t include residual-business assets for purposes of valuing pre-existing intangibles under then-applicable transfer pricing regulations, the Ninth Circuit Court of Appeals held. Amazon.com, Inc. entered into a cost sharing arrangement in which a holding company for European subsidiaries made a “buy-in” payment for the company’s assets that met the regulatory definition of “intangible” under tax code Section 482. The IRS performed its own calculation resulting in an additional $234 million in taxes for the company. The court explained that the IRS was wrong in its calculation and found that although the language of the ...