Medtronic, Inc. v. Commissioner (II)

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August 16, 2018

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3841 Surgical and Medical Instruments and Apparatus
339112 Surgical and Medical Instrument Manufacturing
federal taxation
licensing, royalty rate, transfer pricing, expert testimony, intangible assets, deficiency, lump sum license, comparable uncontrolled transaction, comparable profits method (CPM)
Medtronic, Inc. v. Commissioner (II)
2018 U.S. App. LEXIS 22835
US
Federal Court
8th Circuit
United States Court of Appeals
Louis P. Berneman, Robert S. Pindyck (petitioner/taxpayer); A. Michael Heimert (respondent/IRS)
Wollman

Summary

8th Circuit says Tax Court failed to do the required comparability analysis between selected uncontrolled license arrangement and contested intercompany licenses, making it impossible to say whether CUT was the best method for calculating arm’s-length royalty rates in transfer pricing case.
Medtronic Inc. v. Comm'r
PDF, Size: 285 KB

See Also

In Transfer Pricing Case, Tax Court Fails to Perform Adequate CUT Analysis

Court Case Digests
June 9, 2016

In transfer pricing case centering on taxpayer’s intercompany licensing agreements, Tax Court finds CUT method is the best way to calculate arm’s-length royalty rates; court accepts taxpayer-proposed uncontrolled comparable but makes adjustments to account for differences in transactions.