Veritas Software Corp. v. Comm'r
United States Tax Court
P entered into a cost-sharing arrangement with S, its foreign subsidiary, to develop and manufacture storage management software products. Pursuant to the cost-sharing arrangement, P granted S the right to use certain preexisting intangibles in Europe, the Middle East, Africa, and Asia. As consideration for the transfer of preexisting intangibles, S made a $ 166 million buy-in payment to P. P employed the comparable uncontrolled transaction method to calculate the payment.
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P entered into a cost-sharing arrangement with S, its foreign subsidiary, to develop and manufacture storage management software products. Pursuant to the cost-sharing arrangement, P granted S the right to use certain preexisting intangibles in Europe, the Middle East, Africa, and Asia. As consideration for the transfer of preexisting intangibles, S made a $ 166 million buy-in payment to P. P employed the comparable uncontrolled transaction method to calculate the payment. In a notice of deficiency issued to P, R employed an income method and determined a requisite buy-in payment of $ 2.5…
1Opinion of the Court
OPINION
Foley, Judge:
On November 3, 1999, VERITAS Software Corp. (VERITAS US) and VERITAS Ireland entered into a cost-sharing arrangement (CSA), which consisted of a research and development agreement and a technology license agreement.1 Also on November 3, 1999, VERITAS US, pursuant to the CSA, transferred preexisting intangible property to VERI-TAS Ireland and VERITAS Ireland made a buy-in payment to VERITAS US as consideration for the preexisting intangible property. After concessions, the issue for decision is whether, pursuant to section 482,2 the buy-in payment was arm’s length.
Background
2Cases cited11 opinions
- Shea v. CommissionerUnited States Tax Court · 1999
- Newark Morning Ledger Co. v. United StatesSupreme Court of the United States · 1993
- Sundstrand Corp. v. CommissionerUnited States Tax Court · 1991
- Eli Lilly & Company and Subsidiaries, Cross-Appellees v. Commissioner of Internal Revenue, Cross-AppellantCourt of Appeals for the Seventh Circuit · 1988
- Bausch & Lomb Incorporated and Consolidated Subsidiaries v. Commissioner of Internal RevenueCourt of Appeals for the Second Circuit · 1991
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