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IRS Resumes Examinations of Stock Based Compensation in Cost Sharing Agreements

On July 31, 2019, the Internal Revenue Service (IRS) Large Business and International (LB&I) division formally withdrew its Directive (LB&I-04-0118-005) instructing examiners on transfer pricing selection related to stock based compensation (SBC) in Cost Sharing Arrangements (CSAS). See here for IRS Notice of Withdrawal. The Directive was issued January 12, 2018, after the Tax Court’s opinion in Altera which invalidated Treasury Regulation § 1.482-7A(d)(2). The IRS appealed Altera and issued Directive LB&I-04-0118-005, which we previously discussed here. The Directive instructed examiners to “[s]top opening issues related to stock-based compensation (SBC) included in cost-sharing arrangements (CSAS) intangible development costs (IDCs) until the Ninth Circuit issues an opinion in the Altera case on appeal.” At the time, the IRS indicated that it would issue further guidance once Altera was finally decided. On June 7, 2019, the Ninth Circuit...

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President Trump Announces Intent to Nominate Emin Toro to Tax Court

In a press release this morning, President Trump announced his intent to nominate Emin Toro to serve as a judge on the United States Tax Court (Tax Court). This is the latest in a wave of nominations to high-level tax positions within the government, as we have previously covered here and here. Mr. Toro is currently a partner in the Washington, DC, office of Covington & Burling LLP. His practice focuses on the needs of multinational companies, including both tax controversies and counseling. Mr. Toro’s experience includes audits, administrative appeals, litigation and transfer pricing matters. He received his JD from the University of North Carolina School of Law in 2000 and clerked for the Honorable Karen LeCraft Henderson, US Court of Appeals for the District of Columbia (2000–2001) and the Honorable Clarence Thomas, US Supreme Court (2002–2003).

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