Medtronic Ruling Can Steer Transfer Pricing Tax Disputes

Law360, New York (June 14, 2016, 11:43 PM EDT) -- The U.S. Tax Court's rejection of a $1.36 billion federal tax deficiency calculation for Medtronic serves as a road map to taxpayers in similar transfer pricing disputes with the Internal Revenue Service by highlighting the importance of marshaling specific evidence about ownership and economic risks of various manufacturing operations, experts say.

Judge Kathleen Kerrigan's adoption of royalty rates proposed by Medtronic Inc., with some adjustments, for the licenses needed to manufacture cardiac and neurological medical devices shows multinational companies what kinds of facts should be presented to increase the chances of a favorable ruling.

The issues that Medtronic answered — such...

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