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John Warner, shareholder in the firm's Tax section, comments on one of four cases that shaped the cross-border tax landscape in 2019 in Law360's article "Top International Tax Cases of 2019."

John Warner, a shareholder of Buchanan Ingersoll & Rooney PC, pointed to the issue at the heart of the Altera case: whether the U.S. Department of the Treasury had adequately explained how regulations under Internal Revenue Code Section 482 align with the arm’s-length standard — the benchmark for transfer pricing. Specifically, he cited the inattention IRS and Treasury gave to comments gathered during and after their rulemaking process.

“Procedurally, the IRS and Treasury basically brushed aside all of the commenters who said there is no evidence that unrelated parties ever share stock-based compensation costs,” Warner said, echoing a key conclusion of Judge Milan Smith’s dissent in the rehearing case.

The seemingly fundamental nature of the dispute, as presented in the Ninth Circuit’s majority and dissenting opinions, has led tax specialists including Warner to surmise that Altera would petition the U.S. Supreme Court for redress. Altera has until Feb. 10 to file a petition for certiorari with the high court, but so far there has been no sign of such action.