St. Jude Medical v. Comm'r
United States Tax Court
P is the related supplier of I, a domestic international sales corporation (DISC). P and I use the "50/50 combined taxable income" method of computing the transfer price allowable under sec. 994(a). P paid research and development expenses attributable to potential products which were never placed into production or offered for sale.
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P is the related supplier of I, a domestic international sales corporation (DISC). P and I use the "50/50 combined taxable income" method of computing the transfer price allowable under sec. 994(a). P paid research and development expenses attributable to potential products which were never placed into production or offered for sale. P failed to allocate and apportion such research and development expenses pursuant to sec. 1.861-8(e)(3), Income Tax Regs., as required by sec. 1.994-1(c)(6)(iii), Income Tax Regs., in computing the combined taxable income of P and I. P also failed to allocate 30…
1Opinion of the Court
OPINION
WRIGHT, Judge:
Respondent determined the following deficiencies in petitioner’s Federal income taxes:
Year Deficiency
1979. $194,794
1981. 233,956
1982. 812,906
1983. 832,559
After concessions, the deficiency determined for taxable year 1979 is no longer in issue. The issues remaining for decision with respect to taxable years 1981, 1982, and 1983 are:(1) Whether the research and development expense allocation moratorium under section 223 of the Economic Recovery Tax Act of 1981 (sec. 223 of ERTA), Pub. L. 97-34, 95 Stat. 172, 249, is applicable to the computation of combined taxable…
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