Merck & Co. v. United States

OPINION

HARKINS, Senior Judge:

This federal income tax refund case involves a challenge to reallocations ordered by the IRS in the application of I.R.C. § 482.1 For tax years 1975 and 1976, the Commissioner of Internal Revenue reallocated to plaintiff, Merck & Co., Inc., (Merck) an amount equal to 7 percent of the net sales of its affiliate, Merck Sharp & Dohme Química de Puerto Rico, Inc. (MSDQ). For 1975, the amount reallocated was $4,630,462, and for 1976, the amount was $5,613,208. As a result of these reallocations, income taxes Merck has paid were increased by $2,222,622 for 1975, and by…