Daily Tax Update - March 23, 2017: Amazon Wins Transfer Pricing Dispute

Amazon Wins Transfer Pricing Dispute:  Today, the US Tax Court issued an opinion in Amazon.com, Inc. v. Comm’r, upholding Amazon’s methodology to compute the buy-in payment and allocation of costs under a cost sharing arrangement with a Luxembourg subsidiary.  The court held that petitioner’s comparable uncontrolled transaction method was the best method to determine the requisite buy-in payment, subject to appropriate upward adjustments.  The court deemed the IRS’s proposed alternative methodology to determine the buy-in payment as arbitrary, capricious, and unreasonable, citing extensively the Tax Court’s prior decision in Veritas Software Corp. v. Comm’r, 133 T.C. 297 (2009).

Vote on the American Health Care Act Cancelled:  House Majority Leader Kevin McCarthy (R-CA) announced the highly-publicized vote on the American Health Care Act will not take place today due to a shortage of time, but he expressed hope that the vote can be held tomorrow.

Reps. Delaney, Yoho Introduce Bills to Fund Infrastructure Through Repatriation: Yesterday, Representatives John Delaney (D-MD) and Ted Yoho (R-FL) introduced the Infrastructure 2.0 Act, which would fund infrastructure projects through a mandatory, one-time 8.75% tax of the overseas earnings and profits of deferred foreign income corporations.  The revenue generated would be allocated to the Highway Trust Fund, a newly-created American Infrastructure Fund, and a pilot program to create regional infrastructure accelerators.  The Infrastructure 2.0 Act was introduced by Congressman Delaney in conjunction with the Partnership to Build America Act which proposes to finance infrastructure projects through bonds, the purchase of which would allow corporations to repatriate a proportional amount of overseas earnings tax-free.