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Ninth Circuit withdraws decision in cost-sharing arrangements case

Cost-sharing arrangements case

The U.S. Court of Appeals for the Ninth Circuit today announced the withdrawal of a decision filed 24 July 2018 in a case concerning the validity of the U.S. Treasury regulations with respect to employee stock compensation and cost-sharing arrangements “to allow time for the reconstituted panel to confer on this appeal.”

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Read today’s order [PDF 45 KB]

The Ninth Circuit on 24 July 2018 reversed a 2015 decision of the U.S. Tax Court that had found the Treasury regulations were invalid. The regulations—Reg. section 1.482-7A(d)(2)—require related entities to share the cost of employee stock compensation in order for their cost-sharing arrangements to be classified as “qualified cost-sharing arrangements” and to avoid an IRS adjustment. 

The decision was issued in: Altera Corp. v. Commissioner, Nos. 16-70496, 16-70497 (9th Cir. 24 July 2018).

The Ninth Circuit found that the regulations “withstand scrutiny under general administrative law principles” and thus reversed the Tax Court. Read TaxNewsFlash

Judge Reinhardt fully participated in the July 2018 decision and formally concurred in the majority opinion prior to his death. Today’s order replaces him with Judge Graber.

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