Case: U.S. Court of Appeals Vacates Tax Court’s Order in Transfer Pricing Case, Remands for Further Proceedings (8th Cir.)

The U.S. Court of Appeals for the Eighth Circuit vacated the U.S. Tax Court’s order and remanded the case for further proceedings to determine the proper transfer pricing method in a nearly 15-year dispute between Taxpayer and the IRS. Taxpayer, a medical device company, allocated profits between its U.S. parent and Puerto Rico subsidiary through intercompany licensing agreements. The IRS challenged Taxpayer’s allocation method and proposed its own method, which the tax court rejected in favor of an unspecified three-step method. The appeals court found several errors in the tax court’s analysis. It held the tax court correctly rejected the ...