Medtronic Critiques Cost Models in IRS’s Transfer Pricing Appeal

Medtronic Inc.'s method for pricing intellectual property should be used to determine how much tax it owes on income that the IRS reallocated from a Puerto Rican subsidiary to the US parent, the company’s appellate brief said Friday.

The IRS is authorized under IRC Section 482 to reallocate income between two controlled entities in order for transactions between the entities to reflect the fair market value of transferred property, thereby preventing tax evasion. Medtronic petitioned the Tax Court for review after the IRS in 2010 issued a deficiency notice that reallocated the medical device company’s US taxable income upward by ...