Microsoft Corporation v. Commissioner of Internal Revenue

On Appeal from a Decision of the United States Tax Court, No. 16878-96.

Before: THOMPSON and RAWLINSON, Circuit Judges, and SCHWARZER, * Senior District Judge. DAVID R. THOMPSON, Circuit Judge:

Microsoft Corporation appeals the tax court’s deficiency judgment in favor of the Commissioner of Internal Revenue (the “Commissioner”). In 1990 and 1991, Microsoft claimed “export property” deductions for certain commissions it paid to Microsoft Foreign Sales Corporation. These commissions were for royalty income subsidiaries earned from the international distribution of master copies of Microsoft…