Xilinx Inc. v. Comm'r
United States Tax Court
P entered into a cost-sharing agreement to develop intangibles with S, its foreign subsidiary. Each party was required to pay a percentage of the total research and development costs based on its respective anticipated benefits from the intangibles. P issued stock options to its employees performing research and development.
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P entered into a cost-sharing agreement to develop intangibles with S, its foreign subsidiary. Each party was required to pay a percentage of the total research and development costs based on its respective anticipated benefits from the intangibles. P issued stock options to its employees performing research and development. In determining the allocation of costs pursuant to the agreement, P did not include in research and development costs any amount related to the issuance of stock options to, or exercise of stock options by, its employees. R, in his notices of deficiency, determined that…
1Opinion of the Court
OPINION
Foley, Judge:
Respondent determined deficiencies in the amounts of $24,653,660, $25,930,531, $27,857,516, and $27,243,975 and section 6662(a) accuracy-related penalties in the amounts of $4,935,813, $5,189,389, $5,573,412, and $5,448,795 relating to petitioners’ 1996,1 1997, 1998, and 1999 Federal income taxes, respectively. The issues for decision are whether: (1) Petitioner and its foreign subsidiary must share the cost, if any, of stock options petitioner issued to research and development employees, (2) respondent’s allocations meet the arm’s-length requirement set forth in section…
2Cases cited8 opinions
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- Phillips v. CommissionerUnited States Tax Court · 1987
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