Xilinx, Inc. v. Commissioner

I have considerable doubt as to whether Xilinx, Inc. (“Xilinx”) and Xilinx Ireland allocated the costs associated with employee stock options in a manner that can be characterized as an arm’s length result. I will assume, however, that the tax court correctly resolved that issue. If so, there is clearly a conflict between the arm’s length regulation codified at 26 C.F.R. § 1.482-1(b)(1), which applies to all transactions between controlled parties, and the “all costs” regulation codified at § 1.482-7A(d)(1), which applies only to cost-sharing arrangements between controlled parties.1 I…