We previously reported on McKesson Corporation’s motion for summary judgment on the grounds that the US Department of the Treasury’s stock-based compensation cost-sharing regulations under Internal Revenue Code (IRC) § 482 were invalid as exceeding its delegated authority and invalid based on procedural violations of the Administrative Procedure Act. On June 5, 2026, the government filed its opposing brief, arguing that the regulations fall “well within the bounds” of the statute and are necessary to ensure arm’s-length results in cost-sharing arrangements between related parties.
Defending the Treasury’s regulatory authority
The government contended that IRC § 482 does not require the Internal Revenue Service to rely exclusively on comparable uncontrolled transactions. It argued that the statute grants the Treasury broad authority to allocate income and deductions to clearly reflect income and prevent tax avoidance. Responding to McKesson’s reliance on the Supreme Court of the United States’ 2024 Loper Bright decision, the government argued that the ruling does not undermine the regulations and, if anything, reinforces Congress’s ability to delegate discretionary authority to agencies.
The government also cited to the US Tax Court’s 2025 decision in Facebook v. Commissioner and the US Court of Appeals for the Ninth Circuit’s 2019 ruling in Altera. It argued that these cases support the proposition that the Treasury may define arm’s-length outcomes where no comparable third-party transactions exist and that including stock-based compensation in cost-sharing arrangements is consistent with IRC § 482’s statutory objectives.
Six-year statute of limitations defense no more
Notably, the government chose to drop the affirmative defense it raised in its answer based on the six-year statute of limitations for civil actions against the United States. Under 28 U.S.C. § 2401(a), such suits must be filed within six years of when the right of action first accrues. While the government did not concede that McKesson’s procedural challenge was timely, it explicitly declined to advance the six-year limitations argument. The practical effect is that the merits of McKesson’s regulatory challenge will proceed without a threshold timeliness barrier. The government’s decision may reflect a strategic decision to avoid unfavorable precedent on whether the six-year statute ever applies in a tax refund action.
