International Tax Watch: Tax Court Denies Taxpayer's Motion in Code Sec. 482 Case

In a recent opinion, the US Tax Court denied a taxpayer's motion for partial summary judgment asserting that the Commissioner of the IRS abused his discretion by allocating additional income to a US corporation under Code Sec. 482 . Specifically, on Feb 29, 2016, the US Tax Court issued an opinion in Guidant LLC et. al., 1 which denied the taxpayer's motion for partial summary judgment asserting that the Commissioner's adjustments under Code Sec. 482 were arbitrary, capricious and unreasonable as a matter of law. In its motion, the taxpayer asserted that the Commissioner failed to determine the "true separate taxable income" of each controlled taxpayer in the consolidated group and to make specific adjustments with respect to each transaction involving an intangible, a purchase and sale of property or a provision of services. This article summarizes the Guidant opinion and the issues that it raises.