Altera Corp. & Subsidiaries v. Commissioner

Holding

Treasury Regulations requiring inclusion of stock-based compensation in qualified cost-sharing arrangements are valid as a reasonable interpretation of Section 482.

Facts

Altera challenged Treasury's 2003 cost-sharing regulations requiring inclusion of stock-based compensation costs.

Reasoning

The Ninth Circuit upheld the regulation under State Farm and Chevron, reversing the Tax Court. The decision is significant for transfer-pricing practice and confirms broad Treasury authority under 482 to depart from arm's-length results where the regulation reasonably implements statutory purpose.