McKesson Challenges IRS Rules in Transfer Pricing Dispute

Pharmaceutical giant McKesson Corp. is seeking a nearly $10 million tax refund and challenging Treasury and IRS rules on stock-based compensation in cost-sharing agreements.

McKesson said IRS regulations requiring businesses to include stock-based compensation in cost- sharing agreements are invalid because they go against transfer pricing rules. An arm’s-length standard under those rules doesn’t include sharing of stock-based compensation, according to the complaint filed May 2.

The company also said the IRS violated the Administrative Procedure Act when it wrote the rules.

Companies enter into cost-sharing agreements to determine how to share the costs and risks of developing something together. ...