Overview
Law360 quoted Matt Frank in an article titled "Three Key Takeaways From Coke's $3.3B Transfer Pricing Loss." The article looks at three considerations to take from the US tax court's ruling against Coca-Cola in a $3.3 billion transfer pricing dispute.
Frank, a former tax executive at General Electric and former director of the IRS' Advance Pricing Agreement program, says the Danielson rule is an important legal principle that "ties the hands of taxpayers in a lot of cases." The extension of the concept behind the Danielson rule into transfer pricing is a big deal, he adds.
Frank notes that foreign tax authorities often make the same argument that Coca-Cola sought to make in its case — that the local affiliate acquired marketing intangibles independent of any contract language. Some companies, accustomed to this type of argument, have assumed a certain kind of reciprocity where both sides start with documents and then go beyond them, he says.
"The court makes clear that analytical reciprocity cannot be assumed," Frank says. "You cannot assume you can distance yourself from your documents just because tax authorities routinely do."
The full article can be read at Law360 (subscription required).